Labels 53A and 54W in the 2013 trust tax return
A consolidation of labels has meant that the labels numbered 64A (income of the trust estate) and 65W (beneficiary’s share of income of the trust estate) in the 2012 trust tax return are now numbered 53A and 54W in the 2013 trust tax return. Amounts at labels 53A and 54W As in the trust return instructions, the amount to include at label 53A is the total income of the trust that is legally available for distribution to trust beneficiaries for the income year (distributable income). In determining that amount, you need to consider the trust deed, the trust accounts, and relevant resolutions and determinations. Label 54W records the amount of the trust’s distributable income that each beneficiary was presently entitled to by the end of the income year. The information in these labels helps us administer the trust assessing provisions. The income of the trust is a figure that the trustee is obliged to calculate to work out each beneficiary’s share of the trust’s net (taxable) income. It is also an amount that the trustee needs to know to determine how much to distribute to beneficiaries.
Distributable income
Draft Taxation Ruling TR 2012/D1 gives guidance on the meaning of ‘distributable income’. Under self-assessment, you can follow the meaning as set out in the ruling or, if you disagree with aspects of that ruling, you can apply what you understand the term to mean for the purpose of present entitlement and completing labels 53A and 54W. At label 53A you must show the trustee’s honest determination of the trust’s distributable income. The trustee may think that the trust’s distributable income is calculated based on one of the alternative views in TR 2012/D1 – for example, according to a so-called income equalisation clause. If so, you can include this amount at label 53A. Even if we later consider the trust’s distributable income is a different amount, the trustee won’t have made an error in completing label 53A.
Do not leave the labels blank
We will use labels 53A and 54W to help us identify what may be contrived differences between the income of the trust estate and the net/taxable income of the trust – for example, to obtain tax benefits. Where these labels are incomplete, this will increase the likelihood that we will review you and may lead to a penalty for making a false or misleading statement.
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