Private ruling: Trust income
Published: November 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Q1: Is the income received from the trust assessable income to you as beneficiary? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 98(1). | Income Tax Assessment Act 1936 Section 101.

Reasons for decision: Detailed Reasoning - Taxation of trust income: Subsection 98(1) of the Income Tax Assessment Act 1936 (ITAA 1936) applies to assess the trustee on a beneficiary's share of income where a beneficiary is presently entitled and is under a legal disability. Where a beneficiary is less than 18 years at the end of the tax year, they are considered to be under a legal disability for that year. Where a trustee has discretion to pay or apply income of a trust estate for the benefit of a beneficiary, section 101 of the ITAA 1936 deems a beneficiary to be presently entitled to the amount paid to them or applied for their benefit. In your case, you are the beneficiary of the trust and are presently entitled to the income from the trust. As you are less than 18, it is the trustee of the trust that is assessed on any assessable income. Therefore if income is distributed from the trust to you or used for your benefit, the amounts are assessable to the trustee under subsection 98(1) of the ITAA 1936. A trust tax return may need to be lodged by the trustee. Where a trustee is assessed under subsection 98(1) of the ITAA 1936 and a beneficiary receives no other income apart from their share of trust income, the beneficiary is not required to lodge a personal income tax return as the trustee will pay tax on their behalf. In your case, as you have no other income apart from the trust distributions, you are not required to lodge a tax return.

Relevant facts: You are under 18 years of age. | You have medical conditions and are totally dependent on your parents for support and care. | You were awarded compensation. | The compensation money was placed in a Trust. This is the only money in the Trust. | You receive a fortnightly allowance from the trust to help cover the cost of your care costs. | You now often require additional carers. | You will receive additional amounts from the Trust to help pay for your additional medical and care needs. | You do not have any other income.