The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

4.7.3.60 Summary of Assessable Income from Trusts pre-01/01/2002

Summary

This topic summarises the assessable income from BOTH discretionary (1.1.D.200) AND non-discretionary trusts (1.1.N.100). Assessable income from ONLY one or the other kind of trust is covered elsewhere in this section.

Note: For the income test treatment of general business items also see 4.7.1.20. 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'

Policy reference: SS Guide 4.3.9.60 Income from Private Companies & Trusts, 4.7.3.20 Assessable Income from Discretionary Trusts pre-01/01/2002, 4.7.3.40 Assessable Income from Non-discretionary Trusts pre-01/01/2002

Summary table of assessable income for pensions & allowances

The following table summarises the assessment of income from discretionary AND non-discretionary trusts.

Assessable Income Description
Trust profit (1.1.P.428) The trust profit is not assessed. Only income paid to the income support recipient, and deeming, are assessed.
Distributions

The distributions are maintained as income for 12 months from the date of resolution to distribute.

Explanation: Distributions are shown in the:

  • distribution schedule in the trust income tax return, and
  • income support recipient's personal tax return.

Imputation credits (1.1.I.25) paid with distribution are income for the purposes of the pensions or allowances income test.

Unpaid distributions

Explanation: Distributions not received by the beneficiary but held in the trust.

 Not a financial investment, and therefore, not subject to deeming.
Wages or salary The trust may pay wages or salary to the income support recipient. As with any wages or salary, the amount assessed as income is the current rate of earnings converted to an annual figure. For allowances, the income is assessed on a fortnightly basis.
Loan to trust The balance is added to the income support recipient's other financial assets and is subject to deeming.
Assets gifted to the trust Deeming provisions apply and deprived assets (1.1.D.110) are maintained in the assessment.
Managed investments and shares sold/transferred to the trust Deemed income is assessed in respect of any deprivation, if the income support recipient has not received adequate financial consideration (1.1.A.55).
Consultant's fees

Are assessed as the:

  • amount received on the most recent personal income tax return, or
  • current rate of on-going fees.
Fees paid for the use of plant or equipment owned by an income support recipient Are assessed as income.
Rent paid to an income support recipient

Are assessed as rental income. Allowable deductions reduce the assessable amount.

4.3.8.30 Income from real estate
Trustees remuneration

Is assessed as the amount stated on the most recent:

  • personal income tax return, or
  • trust tax return.

Act reference: SSAct section 9(1)-'financial asset', section 9(1)-'financial investment'

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