Question: If a trust records an overall loss in the current financial year and also has TFN withholding credit on interest income, are the beneficiaries entitled to that credit?
Answer:
Beneficiaries receive TFN withholding credit only when it attaches to a distribution from the trust. With no distributable income due to an overall loss, no distribution occurs, so beneficiaries have no entitlement.
Unlike franking credits, TFN withholding amounts refund directly to the trust rather than passing to beneficiaries. Record these credits under C (Share of credit for tax withheld where ABN not quoted) at item 54 for income to which no beneficiary is presently entitled.
For relevant trusts with specific entitlements to franked distributions or capital gains, calculate shares using the beneficiary's adjusted Division 6 percentage of withheld tax, shown in whole dollars. The total C amounts across distribution statements match credits claimed at item 6 (T - Tax withheld where ABN not quoted) and item 8 (C - Share of credit).