22.214.171.124 Income Attribution
Date of effect
This topic has effect to controlled private trusts and controlled private companies from 1 January 2002.
This topic contains the following information:
- general rules regarding the attribution of income to an attributable stakeholder, and
- information about not double counting attributed income.
Attribution of the income of a private trust or private company
The basic approach for the attribution of the income of a private trust or private company is as follows:
- If the assets (1.1.A.290) of an entity are attributed to a person (the attributable stakeholder) then all of the income (adjusted net profits) generated by those assets will also be attributed to them, (subject to the percentage of attribution of the assets).
- Income from the entity for an attributable stakeholder will NOT be deemed, actual income will be used and will generally be assessed on an annual basis from the income tax return.
- If the attributable stakeholder/s choose to distribute entity capital or income to other people, the amounts distributed are to be treated as gifts by the attributable stakeholder, and are subject to deprivation (1.1.D.110).
Exception: Distribution of the income of an entity to the partner of an attributable stakeholder is NOT treated as a gift of the stakeholder and is NOT subject to deprivation.
Note: An income support recipient who is an attributable stakeholder of a controlled entity can request a reassessment of their circumstances at any time.
Act reference: SSAct section 8(1)-'income'
No double counting of attributed income
If an individual is an attributable stakeholder of a controlled private trust or controlled private company and receives distributions from the structure, only those distributions that exceed the income attributed to the controller are assessed as ordinary income of the individual. Prior year profits distributed to controllers are disregarded for income purposes.
Explanation: The distribution is already assessed against the stakeholder through the attribution process. Prior year profits will most likely have already been assessed against controllers in prior years, so for equity purposes and to prevent double-counting they are not assessable as income against controllers.
Act reference: SSAct section 1207Y Attribution of income, section 1073 Certain amounts taken to be received over 12 months, section 1207X Attributable stakeholder, asset attribution percentage and income attribution percentage, section 1208A Ordinary income from a business-treatment of trading stock, section 1208B Permissible reductions of business and investment income, section 1207Z No double counting of attributed income
Policy reference: SS Guide 126.96.36.199 Reassessments of a Controlled Private Trust or Controlled Private Company, 188.8.131.52 Transfers of the Capital of a Private Trust or Private Company, 184.108.40.206 Distributions of the income of a private trust or private company to an attributable stakeholder, 220.127.116.11 Distributions of the Income of a Private Trust or Private Company to a Non-attributable Stakeholder, 4.1.1 General Provisions of Deprivation