Trusts

Last updated 13 February 2020

Appointment of public officer

If a trust carries on a business in Australia or derives income from property in Australia and there is no trustee who is an Australian resident, the trustee generally appoints a public officer. The public officer must be a natural person of at least 18 years of age residing in Australia and who is capable of understanding the nature of their appointment as the public officer. The appointment of a public officer is made by giving written notice, specifying the name and address of the public officer, to the Commissioner.

The trust does not need to appoint a public officer if the Australian income of the trust consists solely of dividends, interest and/or royalties subject to withholding tax, or the Commissioner has granted an exemption in writing.

If the trustee does not appoint a public officer they may be prosecuted. A fine of up to $210 (one penalty unit) from 1 July 2017 may be imposed for each day that the trustee fails or neglects to meet the requirements.

The public officer is answerable for doing everything required to be done by the trustee under the ITAA 1936, the ITAA 1997 or the Regulations. A public officer who defaults on any of these duties is liable to the same penalties as the trustee.

Lodging a trust tax return

A notice advising which entities are required to lodge tax returns is published annually in the Federal Register of Legislative Instruments. The ‘Lodgment of income tax returns for the year ended 30 June 2018’ legislative instrument can be found on ComLawExternal Link.

For most trusts, the trust income tax return is due to be lodged on or before 31 October 2018. The Commissioner may allow later lodgment dates in certain circumstances, see Due dates for lodging and paying.

If no trustee is resident in Australia, the trust tax return is lodged by the public officer of the trust or, if a public officer does not need to be appointed, by the trust’s agent in Australia.

If a trust has derived income, irrespective of the amount of income derived, a trust will have to lodge a return unless exempted by the Commissioner.

However, a trust tax return is not required if the trust was a subsidiary member of a consolidated group or multiple entry consolidated (MEC) group for the full income year. Where this is the case, the head company of the group will have the responsibility for reporting any trust income in its tax return and for preparing any necessary schedules.

If the administration of a deceased estate is not completed in the same year as the date of death, a trust tax return for that income year does not have to be lodged if:

the deceased person died less than three years from before the end of that income year
no beneficiary is presently entitled to a share of the income of the trust estate at the end of that income year
the deceased estate received no income from capital gains or franked dividends
the net income of the trust estate under section 95 of the Income Tax Assessment Act 1936 is less than $18,200 for that income year, and
there are no non-resident beneficiaries of the trust estate during the income year.

Trustees of trusts that satisfy the conditions of section 102R (public trading trusts) of the ITAA 1936 in an income year are subject to the company tax arrangements and lodge company returns and must apply for a company TFN. Trustees of trusts that satisfied former section 102J (corporate unit trusts) of the ITAA 1936 must lodge company returns if:

their income year started before 1 July 2016;
the trust has made a choice under Subdivision 713-C of the Income Tax Assessment Act 1997 to be the head company of an income tax consolidated group.

For more information, see Unit trusts treated as corporate entities.

International dealings schedule

Where relevant information is reported in the trust tax return at item 22 Attributed foreign income, item 29 Overseas transactions/thin capitalisation you must complete an International dealings schedule 2018 (NAT 73345).

For more information, see International dealings schedule instructions 2018.

Tax offsets

A beneficiary may be entitled to claim certain tax offsets, such as those for:

medical expenses
private health insurance
seniors and pensioners
national rental affordability scheme (NRAS) tax offset
foreign income tax offset
early stage investor tax offset
early stage venture capital limited partnership (ESVCLP) tax offset.

For more information, see the Individual tax return instructions 2018.

If a trustee is assessable on behalf of a beneficiary who is presently entitled but under a legal disability, the trustee may be entitled to tax offsets to which that beneficiary would be entitled. Provide a statement on a separate sheet of paper showing the type and amounts of any claim for a tax offset. Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

Seniors and pensioners tax offset

If you are claiming the seniors and pensioners tax offset, you will need to provide a statement of information for each beneficiary and their spouse (if they had one) and attach to the trust return.

Provide the following information on each statement:

trust’s name and TFN
beneficiary’s name and TFN
full name of beneficiary’s spouse and TFN on 30 June
beneficiary’s residency status
rebate income of the beneficiary
total amount received by the beneficiary of any Australian Government allowances and payments like Newstart allowance, youth allowance and Austudy payment; see item 5 Australian Government allowances and payments on the Tax return for individuals 2018
total amount received by the beneficiary of any Australian Government pensions and allowances; see item 6 Australian Government pensions and allowances on the Tax return for individuals 2018
rebate income of the beneficiary’s spouse; see question T1 Seniors and pensioners in the Individual tax return instructions 2018
total amount received by the spouse of Australian Government pensions and allowances; see Spouse details – married or de facto item P on the Tax return for individuals 2018
total amount received by the spouse of exempt pension income; see Spouse details – married or de facto item Q on the Tax return for individuals 2018.

Net medical expenses tax offset (for disability aids, attendant care or aged care)

A trustee assessed under section 98 of the ITAA 1936 may be able to claim this offset where the trustee has paid for eligible medical expenses in respect of a resident beneficiary.

Only eligible medical expenses for disability aids, attendant care or aged care can be claimed.

The amount of offset the trustee can claim will depend on the beneficiary's share of trust net income (in respect of which the trustee is assessed), the spouse's adjusted taxable income (if any) and family status.

Where the beneficiary’s share of the trust net income plus their spouse’s adjusted taxable income (if any) is:

$90,000 or less for singles or $180,000 or less for a couple or family (plus $1,500 for each dependent child after the first), the trustee can claim an offset of 20% for eligible out of pocket expenses incurred by the beneficiary in excess of $2,333
above $90,000 for singles or above $180,000 for a couple or family (plus $1,500 for each dependent child after the first), the trustee can claim an offset of 10% for eligible out of pocket expenses incurred by the beneficiary in excess of $5,504.

The Trustee will need to work out the beneficiary’s total net medical expenses for disability aids, attendant care or aged care.

For more information, see Question T5 in the Individual tax return instructions 2018 and Net medical expenses tax offset calculator.

To claim the offset, provide a statement on a separate sheet of paper showing all the following.

trust’s name
trust’s TFN
beneficiary’s name
beneficiary’s TFN
beneficiary’s share of trust net income
the amount of total net medical expenses for disability aids, attendant care or aged care claimed by, or on behalf of, the beneficiary
full name of beneficiary’s spouse, if they had a spouse on 30 June
if the beneficiary's spouse died during the year (the period they had the spouse)
- the date from which the beneficiary had a spouse
- the date to which the beneficiary had a spouse
spouse’s adjusted taxable income, if applicable
number of the beneficiary’s dependent children, if applicable.

Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of your trust tax return.

We will calculate the amount of offset the beneficiary is entitled to receive based on the information provided.

Private health insurance tax offset

If you are a trustee who is assessable on behalf of a beneficiary who is presently entitled but under a legal disability (see section 98 of the ITAA 1936) and the beneficiary is entitled to a tax offset under the private health insurance rebate, you can claim the tax offset for this rebate up to the value of any tax payable. To do this, provide a statement on a separate sheet of paper showing:

trust's name
trust's TFN (tax file number)
beneficiary’s name
beneficiary’s TFN
beneficiary’s share of the net income of the trust estate
beneficiary’s spouse’s income for surcharge purposes (if they had a spouse on 30 June 2018)
all the lines of information separately as they are displayed on the private health insurance statement
- ‘Health insurer ID’ at B on the beneficiary’s health insurance statement
- ‘Membership number’ at C on the beneficiary’s health insurance statement
- ‘Your premiums eligible for Australian Government rebate’ at J on the beneficiary’s health insurance statement
- ‘Your Australian Government Rebate received’ at K on the beneficiary’s health insurance statement
- ‘Benefit code’ at L on the beneficiary’s health insurance statement
- tax claim code (see Private health insurance policy details 2018 in the Individual tax return instructions 2018)
- number of beneficiary’s dependent children who are under 21 years old or full-time students under 25 years old.

If the beneficiary has a spouse and they have agreed to allow the beneficiary to claim their own share of the rebate as well as their spouse's share of the rebate, you must provide the policy details listed above for the spouse. The beneficiary and spouse must be covered under the same policy so the policy details should be the same for the beneficiary and spouse except for the tax claim code which will be C for the beneficiary and D for the spouse. See ato.gov.au/privatehealthinsurance for assistance in providing the details.

Rebate percentages are adjusted on 1 April each year. If premiums for the policy were paid before and on or after 1 April, the private health insurance statement will contain at least two lines of information. All those lines should be provided separately without adding amounts reported in any column or row.

Sign the statement, attach it to the trust tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

For more assistance in providing private health insurance policy details, see Private health insurance policy details in the Individual tax return instructions 2018.

Special cases

Public trading trusts are taxed as companies, and so are required to lodge a Company tax return 2018. A public trading trust is defined below and must apply for a company TFN.

The trust loss provisions of Schedule 2F to the ITAA 1936 apply to public trading trusts (even though they are taxed as companies), except where the public trading trust is participating in the consolidation regime for taxing wholly owned groups as a single income tax entity.

For more information about the trust loss provisions, see Losses. For detailed information about the treatment of losses under consolidation, see the Consolidation reference manual:

Public trading trusts

A trust is a public trading trust, if:

the trust is a public unit trust
the trust is a trading trust; and
either
- the trust is a resident unit trust, defined as above under corporate unit trust, or
- the trust was a public trading trust in a previous income year

A unit trust is a resident unit trust for an income year if, at any time during the income year:

any property of the unit trust was situated in Australia, or
the trustee of the unit trust carried on business in Australia

and

the central management and control of the unit trust was in Australia, or
one or more persons who were residents held more than 50% of the beneficial interests in the income or the property of the unit trust.

A public unit trust for this purpose is a trust any of whose units are listed on a stock exchange or offered to the public or whose units are held by 50 or more persons, except where 20 or fewer persons hold or have the right to hold 75% or more of the beneficial interests in the income or property of the trust, and the Commissioner does not consider it reasonable to treat the trust as a public unit trust.

In addition, a unit trust is a public unit trust if one or more tax exempt entities (other than an exempt institution that is eligible for a refund of franking credits) hold or have the right to hold 20% or more of the beneficial interests in the income or property of the trust, or are paid or credited with 20% or more of the moneys paid or credited by the trustee to the unit holders, or an arrangement exists whereby the two outcomes just outlined could have been obtained.

Broadly speaking, a trading trust for this purpose is a trust whose trustee:

carries on a trading business, or
controls, or is able to control, the carrying on of a trading business by another person.

A trading business for this purpose is a business that does not consist wholly of eligible investment business consisting of:

investing in land for rent
investing or trading in loans, securities, shares, units in a unit trust, futures contracts, forward contracts, interest rate swap contracts, currency swap contracts, forward exchange rate contracts, forward interest rate contracts, life assurance policies, or rights or options in any of these, or
investing or trading in other financial instruments that arise under financial arrangements (other than certain excepted arrangements).

From 2008–09 there is a 2% safe harbour allowance at the whole of trust level for non-trading income and for investments in land there is a 25% safe harbour allowance for non-rental, non-trading income from those investments. However, the trustee of a unit trust may choose not to apply those safe harbours.

Attribution managed investment trusts

Eligible managed investment trusts can make an irrevocable choice to become an Attribution managed investment trust (AMIT). Where this choice has been made, trustees will be required to lodge an Attribution managed investment trust (AMIT) tax return and Attribution managed investment trust (AMIT) tax schedule where the trust is eligible to be an AMIT for the income year.

Ceasing to be an AMIT

A trust that:

was an AMIT for an earlier income year, and
is not eligible to be an AMIT for a later income year

may need to lodge a Trust tax return for the later income year.

A trust that is not eligible to be an AMIT for an income year must continue to work out unders or overs that relate to a year that the trust was an AMIT.

Where the trust has an under or over in the later income year (the discovery year), it must work out the unders and overs and their effect on trust components as if it were an AMIT. The trust must then take these amounts into account in determining the trust's net income, exempt income, NANE income and/or tax offsets, in accordance with Subdivision 276-K of the ITAA 1997.

Broadly, unders and overs can only arise in income years that fall within the period of review (generally four years) for the original income year (the base year) that they relate to.

Where these unders or overs are discovered in a post-AMIT income year and you are required to lodge a Trust tax return, you must lodge an AMIT tax schedule with the return to disclose those unders or overs.

Trustee liabilities

Where an over of a character relating to tax offset arises, you may be liable to pay tax on the amount by which the over exceeds your other tax offsets of that character for the discovery year. To determine whether you have a liability to pay tax, see subsection 276-820(6) of the ITAA 1997.

Where an ex-AMIT is liable to pay tax under paragraph 276-820(6)(a), you must provide the following information in the text box at Additional information.

AMIT name
AMIT ABN/TFN
Subject: Trustee assessment under subsection 276-820(6) of the Income Tax Assessment Act 1997
income year the excess amount relates to, that is, the base year
amount of the excess.

Additional Information

If these instructions ask you to provide additional information, provide it in the text box at Additional information. Include a heading indicating the question or item the information relates to.

Keep any schedules or documents with your tax records.

Annual investment income reporting

Managers of unit trusts that are investment bodies for the purposes of Part VA of the ITAA 1936 may be required under Division 393 of Schedule 1 of the TAA to lodge an Annual investment income report if they made distributions to unit holders during the year. The report requires details of distributions, including the amounts paid and the names of the payees. For more information, phone 13 28 66.

Payment arrangements

Paying your tax debt

Income tax debts must be paid by the due date.

You can make payments by one of the five methods explained in How to pay. For more information, phone 1800 815 886.

If the trust tax return is lodged on time, any tax payable by the trustee is due on the later of:

21 days after the due date for lodgment of the tax return, or
21 days after receipt of the notice of assessment.

If the trust tax return is lodged late or not at all, any tax payable by the trustee is due 21 days after the due date for lodgment.

The general interest charge (GIC) accrues on outstanding amounts from the due date for payment.

For more information on the GIC, phone 13 28 66.

What if you cannot pay your tax debt by the due date?

If you cannot pay your tax debt by the due date, phone Account management on 13 11 42 to avoid action being taken to recover the debt.

We expect you to organise your affairs to ensure that you can pay your debt on time. However, we may allow you to pay your debt under a mutually agreed payment plan if you have genuine difficulty paying your debt on time but have the capacity to eventually pay the debt. The GIC will continue to accrue on any outstanding amounts of tax during any payment arrangement.

In some circumstances the trustee may need to provide details of the trust’s financial position, including a statement of its assets and liabilities and details of income and expenditure. We will also want to know what steps the trustee has taken to obtain funds to pay its tax debt and the steps the trustee is taking to meet future tax debts on time.

QC55259