While following the High Court decision in Bamford there is no doubt (if there was prior to that) that the proportionate approach is the correct approach for working out the present entitlement to the net income of a trust, this is now confirmed in a draft determination by the Commissioner.

Therefore in order to determine the share of net income of a trust estate to be included in a beneficiary’s assessable income, the beneficiary must:

  • calculate how much of the income of the trust estate they are (or are taken to be) presently entitled to, as percentage share of that income
  • apply that percentage to the net income of the trust.