Transactions or dealings with international related parties
Was the aggregate amount of your transactions or dealings with international related parties (including the value of any property/service transferred or the balance of any loans) greater than $2 million?
- No – Print X in the No box at label W.
- Yes – Print X in the Yes box at label W.
Did the thin capitalisation provisions affect you?
Print X in the appropriate box at label O Did the thin capitalisation provisions affect you? For more information, see Appendix 3.
If the answer is yes for either label W or label O, complete and attach an International dealings schedule 2023 to the tax return. Print X in the Yes box at Have you attached any 'other attachments'? at the top of page one of the tax return.
Where the trust is a member of a consolidated group or MEC group for the whole income year and derived foreign income, the responsibility for preparing the schedule will rest on the head company of the group. Where a return is required because the trust had a period in the income year when it was not a member of a consolidated group or MEC group (a non-membership period) the trust should complete an International dealings schedule 2023 where it has derived foreign income attributable to non-membership period. For more information on reporting multiple non-membership periods during the year, see Consolidation reference manual sheet C9-5-110.
The aggregate amount of the trust’s transactions or dealings is the total amount of all dealings, whether on revenue or capital account (including property transfers or service provision), and includes the balance of any loans or borrowings outstanding with international related parties. Transactions must not be netted off against each other. For example, a $600,000 purchase from, and a $700,000 sale to, a related party should be treated as totalling $1,300,000, not $100,000.
International related parties may be persons who are not dealing wholly independently with one another in their cross-border commercial or financial relations, and whose dealings or relations can be subject to Subdivision 815-B of the ITAA 1997 or the associated enterprises article of a relevant double tax agreement (DTA).
The term includes the following:
- any overseas entity or person who participates directly or indirectly in the management, control, or capital of the trust
- any overseas entity or person in respect of which the trust participated directly or indirectly in the management, control, or capital
- any overseas entity or person in respect of which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in the management, control, or capital of the trust.
Participates includes a right of participation, the exercise of which is contingent on an agreed event occurring. Person has the same meaning as in subsection 6(1) of the ITAA 1936 and section 995-1 of the ITAA 1997.
For more information on the relevant degree of participation, see IT 2514 Income tax: Company Schedule 25A: Information return for companies that transact business with related overseas entities.
The type of dealings or transactions which will require the trust to complete an International dealings schedule 2023 are its dealings with:
- related parties as above, such as an overseas holding company, overseas subsidiary, or non-resident trust in which the entity has an interest
- unrelated parties where the conditions that operate between you and the unrelated party are different to the conditions that might be expected to operate between independent parties dealing wholly independently with one another in comparable circumstances.
These dealings or transactions may be the provision or receipt of goods or services, or transactions in which money or property has been sent out of Australia, or received in Australia from an overseas source during the income year. They may include the transfer of tangible or intangible property, provision or receipt of services, or the provision or receipt of loans or financial services.
If money or property is not actually sent out of Australia or received in Australia, but accounting entries are made that have the effect of money or property being transferred, this is also to be taken as an international transaction.
Interest expenses overseas
Print at label D Interest expenses overseas the amount of interest paid to non-residents.
If you include an amount at label D, complete an International dealings schedule 2023.
This amount should have been included at item 5 Business income and expenses – label I Total interest expenses, plus or minus any reconciliation adjustment for interest expense that you include at item 5 Business income and expenses – label B Expense reconciliation adjustments.
An amount of tax (withholding tax) is generally withheld from interest paid or payable to non-residents, and from interest derived by a resident through an overseas branch. You must remit these amounts to us. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner of Taxation. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.
Do not use the trust tax return as a substitute for the PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.
Royalty expenses overseas
Print at label E Royalty expenses overseas the royalty expenses paid to non-residents during 2022–23.
If you include an amount at label E, complete an International dealings schedule 2023.
This amount should have been included at item 5 Business income and expenses – label J Total royalty expenses, plus or minus any reconciliation adjustment for royalty expenses that you included at item 5 Business income and expenses – label B Expense reconciliation adjustments.
An amount of tax (withholding tax) is generally withheld from royalties paid or payable to non-residents and from royalties derived by a resident through an overseas branch. You must remit this amount to us. You cannot claim a deduction unless you have remitted any withholding tax to the Commissioner. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.
Do not use the trust return as a substitute for the PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.
Record keeping
Keep a record of the following:
- names and addresses of recipients
- amounts paid
- nature of the benefit derived, for example, a copy of the royalty agreement
- details of tax withheld where applicable and the date on which it was remitted to us.
Non-resident beneficiaries
Was any beneficiary who was not a resident of Australia at any time during the income year ‘presently entitled’ to a share of the income of the trust?
- No – Print X in the No box at label A.
- Yes – Print X in the Yes box at label A.
Ensure that the details of the beneficiaries and the assessable amounts of net income referable to the income of the trust estate to which each beneficiary, who is a non-resident at the end of the income year, is presently entitled are entered under item 58 Statement of distribution – label J and K Non-resident beneficiary additional information. Do not include here the non-resident beneficiary's share of the trust income which is subject to non-resident withholding tax, such as withholding tax on interest, dividend, and royalties. Instead, these amounts should be detailed in the additional information statement for the beneficiary and attached to the return.
If a beneficiary is a non-resident at the end of the income year and is presently entitled to a share of the income of the trust, the trustee is liable to tax on that share of the net income of the trust that is attributable to a period when the beneficiary was a resident, regardless of its source, and so much of the share of the net income that is attributable to a period where the beneficiary was a non-resident and is also attributable to Australian sources.
In the case of amounts covered by a withholding requirement, the trustee, at the time of distribution, deducts the tax payable and remits it to us. If you have withheld amounts from payments to non-residents, you may need to lodge a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report.
If you answered Yes at label A, attach a statement for each beneficiary who was a non-resident of Australia at any time during the income year, and who was presently entitled to income of the trust, showing:
- full details of any distribution to the beneficiary, including amounts of interest, royalties, franked dividends and unfranked dividends
- if a withholding amount has been paid and remitted to us from the distribution, the amount of such distribution and the withholding amount paid
- name and residential address
- if any change occurred in the residency status of the beneficiary during the income year, details of when the beneficiary became or ceased to be a resident
- if from any distribution (other than interest, dividend or royalty income subject to non-resident withholding tax) made to the beneficiary, tax has been deducted and remitted to us, the amount of the credit claimed for remittances made
- if the trust is a fixed trust and at least 90% of its assets, held either directly or indirectly, are not taxable Australian property
- if it is contended that all or part of the non-resident beneficiary’s share of the income included income of the trust derived outside Australia and while the beneficiary was not a resident
- the beneficiary’s share of that income
- the basis of the contention that the beneficiary is not a resident of Australia.
Also provide evidence that:
- if no amounts have been transferred overseas, the beneficiary’s share of income has been applied for the benefit of the beneficiary or otherwise dealt with on behalf of the beneficiary
- the beneficiary has been notified of the entitlement.
Print X in the Yes box at Have you attached any 'other attachments'? at the top of page one of the tax return.
Transactions with specified countries
- No – Print X in the No box at label C.
- Yes – Print X in the Yes box at label C.
Did you send any funds or property to, or receive any funds or property from, any of the countries listed below? This includes sending or receiving funds or property indirectly, through another entity or country.
Do you have the ability to control the disposition of any funds, property, investments, or any other assets located in any of the countries listed below? This includes:
- funds or assets may be located elsewhere, but are controlled or managed from one of the countries listed below, and
- where you have an expectation you are able to control the disposition of the funds or assets, or you have the capacity to control the disposition indirectly, for example, through associates.
The specified countries are as follows:
- Andorra
- Anguilla
- Antigua and Barbuda
- Aruba
- Bahamas
- Bahrain
- Barbados
- Belize
- Bermuda
- British Virgin Islands
- Cayman Islands
- Cook Islands
- Curacao
- Cyprus
- Dominica
- Gibraltar
- Grenada
- Guernsey
- Hong Kong
- Isle of Man
- Ireland
- Jersey
- Labuan (in Malaysia)
- Liberia
- Liechtenstein
- Luxembourg
- Marshall Islands
- Mauritius
- Monaco
- Montserrat
- Nauru
- Netherlands
- Niue
- Panama
- Sint Maarten (Dutch part)
- Samoa
- San Marino
- Seychelles
- Singapore
- St Kitts & Nevis
- St Lucia
- St Vincent & the Grenadines
- Switzerland
- Turks and Caicos Islands
- US Virgin Islands
- Vanuatu.
Continue to: Personal services income – item 30