Assessment of Additional Net (Taxable) Income in Simms Discretionary Trust
In the Simms Discretionary Trust, with a trust income and net (taxable) income both at $100,000, each beneficiary is initially assessed based on their allocated share:
When a subsequent ATO review reveals an incorrect $10,000 deduction claimed for entertainment expenses, increasing net (taxable) income to $110,000, each beneficiary's share of the additional income is calculated proportionately:
If the trust deed included an 'income equalisation' clause, adjusting trust income to match net (taxable) income, each beneficiary's share would be recalculated:
In this scenario, Jane, as the 'balance beneficiary,' would absorb the additional $10,000 trust income. Each beneficiary would then be assessed accordingly:
Impact of Fully Streamed Franked Dividends and Capital Gains
If the ATO amends a fully streamed franked dividend or capital gain, only the beneficiary to whom it was streamed would be affected. However, if the amendment impacts trust income, a review of the initial entitlement is advised to ensure proper streaming.
For further assistance or inquiries regarding trust income assessments and amendments, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or schedule an appointment through the live calendar.