To calculate the amount of income that needs to be included for Working for Families, first you need to calculate company income using the following formulas.
trust's voting interest ÷ total voting interest
× company's total income
− dividends
= company income
Calculate attributed trustee income
To calculate the amount that needs to be included for Working for Families, use this formula:
trustee income + company income
÷ number of settlors
Trustee income is the amount of income of the trust that has not been allocated and distributed to beneficiaries.
Dividends are the total amount, not exceeding the company income, of dividends paid by the company to the trustee for the income year.
Settlor number is the number of settlors in the person's trust, including the primary caregiver and/or their spouse/partner.
Gavin and Stacey receive Working for Families payments for their 3 children. They are also the only settlors of the "A Family Trust" trust.
The trust has a voting interest of 67% in a building company. Both Gavin and Stacey work for the company.
The building company has net income of $200,000 and paid the trust dividends of $30,000. The trust also received $4,500 interest that was treated as trustee income.
Calculation
Trustee income is $4,500
Company income is:
(67 ÷ 100) × $200,000
− $30,000 = $104,000
$4,500 + $104,000 = $108,500
÷ 2
Attributed trustee income is $54,250.
Gavin and Stacey will have to include attributable trustee income of a total of $108,500 ($54,250 each) as part of their family income for Working for Families.