This TD, issued on Wed 24.10.2012, provides the Commissioner’s views on whether a beneficiary’s share of net income is worked out by reference to the proportion of the income of the trust estate to which the beneficiary is presently entitled.
The TD states that to determine the share of net income of a trust estate to be included in a beneficiary’s assessable income under para 97(1)(a) of the ITAA 1997, the beneficiary must apply the proportionate approach as follows:
- calculate how much of the income of the trust estate they are presently entitled to as a percentage share of that income; and
- apply that percentage to the net income of the trust.
The TD says in relation to the 2010-11 and later income years, if a trust has made a capital gain or received a franked distribution to which no beneficiary is specifically entitled, the proportionate approach may also be relevant to the application of Subdivs 115-C and 207-B of the ITAA 1997.
The TD also outlines the treatment of amended assessments, and when a recalculation of trust income may be required. It was previously issued as Draft TD 2012/D5 and is largely unchanged. It does, however, include an additional example in relation to situations where the net income is less than the income of the trust estate.
DATE OF EFFECT: Applies both before and after its date of issue.
[LTN 206, 24/10]