Tax Laws Amendment (2011 Measures No. 5) Act 2011 (62 of 2011)

Schedule 2   Interim changes to the taxation of trust income

Part 1   Main amendments

Income Tax Assessment Act 1997

24   At the end of Subdivision 207-B

Add:

207-58 Specifically entitled to an amount of a franked distribution

(1) A beneficiary of a trust estate is specifically entitled to an amount of a *franked distribution made to the trust estate in an income year equal to the amount calculated under the following formula:

where:

net financial benefit means an amount equal to the *financial benefit that is referable to the *franked distribution (after any application by the trustee of expenses that are directly relevant to the franked distribution).

share of net financial benefit means an amount equal to the *financial benefit that, in accordance with the terms of the trust:

(a) the beneficiary has received, or can be reasonably expected to receive; and

(b) is referable to the *franked distribution (after application by the trustee of any expenses that are directly relevant to the franked distribution); and

(c) is recorded, in its character as referable to the franked distribution, in the accounts or records of the trust no later than the end of the income year.

(2) To avoid doubt, for the purposes of subsection (1), something is done in accordance with the terms of the trust if it is done in accordance with:

(a) the exercise of a power conferred by the terms of the trust; or

(b) the terms of the trust deed (if any), and the terms applicable to the trust because of the operation of legislation, the common law or the rules of equity.

207-59 Franked distributions within class treated as single franked distribution

(1) Subsection (3) applies if:

(a) a trust receives 2 or more *franked distributions in an income year; and

(b) all of the franked distributions that the trust receives in the income year are, in accordance with the terms of the trust, to the extent that they are distributed in that income year, distributed within a single class.

(2) For the purposes of this Subdivision and Division 6E of Part III of the Income Tax Assessment Act 1936, treat all of the *franked distributions that the trust receives in the income year as one single franked distribution.

(3) To avoid doubt, for the purposes of subsection (1), something is done in accordance with the terms of the trust if it is done in accordance with:

(a) the exercise of a power conferred by the terms of the trust; or

(b) the terms of the trust deed (if any), and the terms applicable to the trust because of the operation of legislation, the common law or the rules of equity.