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 2019.

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 must 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 2019
• 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 2019
• rebate income of the beneficiary’s spouse; see question T1 Seniors and pensioners in the Individual tax return instructions 2019
• 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 2019
• 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 2019.

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

Legislation passed in 2014 abolishes this offset from 1 July 2019. This is the final year the offset can be claimed.

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 $2,377
• 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 $5,609.

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 2019 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 2019)
• 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 2019 in the Individual tax return instructions 2019)
  • 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.

The law has changed regarding the way insurers provide policy holders with private health insurance details. It is now optional for registered health insurers to provide a private health insurance statement. A statement will only be provided if requested from the registered health insurer.

Contact the health insurer for the relevant statement to ensure you use the correct details as displayed on the statement.

Your trust tax return may be delayed if you do not use the relevant statement and the private health insurance details you provide are incorrect.

For more assistance in providing private health insurance policy details, see Private health insurance policy details in the Individual tax return instructions 2019.

Special cases

Public trading trusts are taxed as companies, and so are required to lodge a Company tax return 2019. They must also apply for a company TFN. A public trading trust is defined below.

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:

• Part C – Detailed information
• C9 – Determine tax liabilities, manage obligations
• C9-5-110.

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 1800 072 681.

Payment arrangements

Paying your tax debt

Income tax debts must be paid by the due date. For payment options, see Payment.

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 the fund cannot pay the debt on time, phone 13 11 42.

You are expected to organise your affairs to ensure that you pay your debts 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.

Approval for a payment arrangement is not given automatically. The trustee may need to provide details of the trust’s financial position, including a statement of its assets and liabilities and details of its 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 it is taking to meet future tax debts on time.