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Amended definition of beneficiary income

The definition of beneficiary income in s. HC 6 has been amended with application from the 2009-10 and later income years. The amended definition extends the 6 month period within which a trustee must allocate income to the later of the end of the 6-month period or the period within which the trustee either files or is required to file a return.

The definition was amended to address problems where tax agents were effectively required to prioritise the preparation of trust accounts and tax returns over other accounts and returns so as to meet the 6-month deadline.

However, it is common for deeds of trust to include a clause that provides that any income not allocated or paid within 6 months will be capitalised. Accordingly, care is required to ensure that the terms of the deed of trust provide that income is available to be paid or applied outside the 6 month period.

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