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This topic provides information on the following:
Note: For the income test treatment of general business items also see 4.7.1.20 Assessment of Income for Sole Traders & Partnerships. The assessment of general business items applies to all business structures including sole traders, partnerships, private trusts and private companies.
Act reference: SSAct section 8(1)-income'
Beneficiaries to non-discretionary trusts MAY have an interest in the trust income depending on the nature and terms of the trust deed. The share of the trust 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.
Act reference: SSAct section 1073 Certain amounts taken to be received over 12 months
The following table describes the assessment of trust income which includes franking credits.
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If an income support recipient is… |
Then the… |
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a pensioner or allowee, |
- cash dividends paid to them are held as income for 12 months from the date distributed, under section 1073 of the SSAct, and - franking credits paid with the dividend ARE income for the purposes of either the pensions or allowances income test. Explanation: Franking credits are also known as imputation credits (1.1.I.25). |
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. The definition of these roles is in the Complex Assessment Officers Handbook.
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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: - balance of any loan, or - value of a deprived asset (1.1.D.110). |
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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. |
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Last reviewed: 6 September 2010
