Question

Under s97 ITAA 1936, where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate, the assessable income of the beneficiary shall include that share of the net income of the trust estate. Prior to the High Court decision in Bamford, what two alternate interpretations of the word “share” were accepted?

Select one:

a. Proportionate and quantum

b. Quantum and equal

c. Proportionate and calculated

d. Capital and income

Answer 1

Ans : b. Quantum and quantum

Trust Distributions

The tax law requires a presently entitled beneficiary to include in their assessable income (under s. 97(1)(a) of the ITAA 1936) a share of the net (i.e. taxable) income of the trust. To establish this share of net income it is necessary to:

• calculate the amount of income of the trust that the beneficiary is presently entitled to, as a percentage of the total distributable income; and
• apply that percentage to the net income of the trust estate.

This is referred to as the proportionate approach.

Earlier it was quantum and equal approach