Assessment of income
Beneficiaries of non-discretionary trusts may have an interest in the trust's income depending on the nature and terms of the trust deed. The share of the trust's income that is allocated or distributed by the trustee(s) to a beneficiary is assessable income. Allocations and distributions are assessed as income for 12 months.
Overview of Ordinary Income
Assessment of franking credits
The following table describes the assessment of trust income that includes franking credits (known as imputation credits).
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If a person is... |
Then the... |
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a pensioner |
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Description of income assessment for different roles within trusts
The following table describes the roles of individuals within the trust and the treatment of their trust related income. A person may have more than one role and each needs to be considered separately.
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Role |
Description |
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Settlor |
Does not usually receive income from the trust, but the deprivation of income provisions may apply to loans or gifts. |
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Contributor |
May receive income from interest on loans. Deeming applies to the:
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Beneficiary |
Is entitled to a fixed proportion of the distribution of income from the trust. This is held as income for 12 months from the date of distribution. |
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Trustee |
May receive wages, fees, or salary. The current rate payable is held as on-going income. 'Out of pocket' annual basis expenses are not income. |