Recording attribution income 043-04050020

Where a trust or company operates more than one unrelated business within the private trust or private company structure, the income and expenses relating to each business will be assessed separately and any losses from one business will not be offset against the profit of another business operating within the private trust or private company structure.

Note: different rules apply to an approved Special Disability Trust (SDT). This procedure does not cover SDTs.

Where a private trust or private company operates more than one necessarily related business within the structure, offsetting of losses from one business type against the profits from the related business is allowed. The offset of losses will be limited to the extent that the loss was necessarily incurred to earn the income or profit of the second business.

In all cases it is up to the customer to identify a specific proportion of these losses. This situation would usually only arise at the request of the customer.

The necessarily related rules can be applied regardless of the business structures involved. For example, a loss by a business operated by a private trust or private company could be offset against a profit from a necessarily related business operated by a partnership or sole trader as long as the controllers of the private company or private trust are the same persons who are partners or a sole trader.

The decision about whether the businesses within an organisation are necessarily related will be made by the CAO.

Service Officers and CAOs must use the correct date of event for business income and assets.

Working Credit and employment income nil rate provisions cannot be used for attribution income as it is not employment income.

From 1 July 2019 Work Bonus may be applied to attribution and distribution income received by a customer who is:

• of Age Pension age, and
• in receipt of an income support payment other than PPS

Work Bonus will be applied only where the customer's role in the trust or company involves personal exertion, (that is the customer's direct involvement helps generate the income for the entity). This could include such activities such as truck driving, book keeping or sales.

Work Bonus can be applied to distribution income prior to 1 July 2019 only if the distributions are considered to be paid in lieu of wages and coded as employment income.

Note: if the customer is receiving a wage from a private trust, the customer can deplete their Working Credit balance to offset the wages only. If the customer is eligible for Work Bonus any available balance can also be used to offset these wages.