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Budget 2024 | The Government has confirmed changes to personal income tax, the independent earner tax credit, in-work tax credit, and the minimum family tax credit. Find out more: Personal income tax threshold changes

If the trust has control of a company

To calculate the amount that needs to be included for Working for Families Tax Credits and student loans, first you need to calculate company income using whichever formula applies.

(trust's voting interest ÷ total voting interest) × (company's total income − dividends) = company income

Dividends are the total amount of dividends paid by the company for the income year.

Calculate attributed trustee income

To calculate the amount that needs to be included for Working for Families and student loans, use this formula:

(trustee's adjusted net income + company income) ÷ settlor number

Trustee's adjusted net income is the amount of income of the trust that has not been allocated and distributed to beneficiaries.

Settlor number is the number of settlors in the person's trust, including the borrower themselves (for student loans) and the primary caregiver and/or their spouse/partner (for Working for Families).

The number of settlors can increase during the tax year. If the number of settlors in the trust increases during the year then use the higher number for the purpose of the calculation.

The number of settlors cannot decrease during the tax year even if a settlor dies. If the settlor died in a previous tax year then do not include them when you count the settlors.

Example

Gavin and Stacey receive Working for Families payments for their 3 children and Gavin has a student loan.

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 dividends of $40,000. The trust also received $4,500 interest that was treated as trustee's adjusted net income.

Calculation

Trustee's adjusted net income is $4,500

Company income is:

(6,700 ÷ 10,000) × ($200,000 − $40,000) = $107,200

($4,500 + $107,200) = $111,700
÷ 2

Attributed trustee income is $55,850.

Gavin and Stacey will have to include attributable trustee income of a total of $111,700 ($55,850 each) as part of their family income for Working for Families Tax Credits. Gavin's $55,850 will also be included as income for calculating his student loan repayment obligation.

Last updated: 01 Apr 2024
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