ATO flags trust reporting changes for tax time 2026

Form 1 July 2026, the ATO will add three labels in the statement of distribution section of the trust tax return, which include:

• B1 Non-primary production managed investment scheme amount
• U2 Franked distribution related to investments amount
• H1 Other assessable foreign source income from a financial investment amount.

The ATO said this is information that tax agents already provide to individual beneficiaries to support the calculation of their net financial investment loss at IT5 in their tax return.

"Including this in the statement of distribution will streamline that experience for both you and them," the Tax Office said.

The ATO  said it would also work with digital service providers to address common lodgment errors and ensure that consistent information has been provided with the return.

"Examples of checks include ensuring that beneficiary details are properly completed and align with the provided assessment calculation code in the statement of distribution," it said.

"Your digital service provider will let you know how these changes impact the software you're using, and how to resolve any errors before you can lodge the trust tax return."

The ATO said these enhancements will prevent information being sent to the ATO that delays the processing of trust tax returns.

Statement of distribution data will also be made available in pre-fill reports for individual beneficiaries from 1 July 2026.

"The data will become available in pre-fill once we have processed the trust's tax return and successfully matched the information to the individual beneficiary," the ATO said.

"For tax agents who represent both the trust and beneficiaries, this change should not impact your current workflows when lodging the returns for the groups. Tax agents who don't prepare both the trust and beneficiary returns will benefit from receiving both the pre-fill and distribution statement and being able to reconcile the information for accuracy."

The ATO told tax agents that pre-fill information should be reviewed against other information provided by the trustee.

"The most up-to-date information should be included in the trust income schedule with the beneficiary's tax return," it said.

"Lodging the trust tax return as early as possible will help reduce queries around missing distribution statements and the costs in managing those requests."

Further changes for tax time 2027 

The ATO also outlined some further changes coming up for tax time in 2027.

"Further changes to the trust tax return from 1 July 2027 include additional labels for the statement of distribution and other reporting changes. These are aimed at streamlining the processing of trust returns and improving transparency," the ATO said.

"You need to start preparing for upcoming changes now, to ensure your clients can report correctly and are meeting their obligations."

The statement of distribution changes for 2027 include the reporting of unpaid present entitlements of beneficiaries and reporting the rateable reductions applied when calculating franked distributions and capital gains amounts.

The changes also include simpler reporting of non-resident beneficiary distributions of interest, unfranked dividends, royalties and associated tax withheld.

"This will remove the need to provide an additional information schedule with the trust tax return form," the ATO said.

The ATO said there will also be layout changes to the paper trust tax return and trust income schedule to incorporate the new labels.

"We're [also] improving the reporting requirements for family trust elections and interposed entity elections, by requiring the details of the specified individual named in these elections to be included in the trust tax return, where applicable," the ATO said.

"This increases visibility for the trustee and tax agent and should help prevent unintended consequences."