Income tax: is withholding tax payable on the net dividend and/or interest component when an Australian resident trust makes a distribution to which a non-resident beneficiary is presently entitled?

Yes. Withholdng tax on dividend and interest income is payable on the net distribution by the trustee.

Subsection 128A(3) of the Income Tax Assessment Act 1936 provides that a trust distribution which includes a dividend and interest component, to which a non-resident beneficiary is presently entitled, is deemed to retain its nature in the hands of the beneficiary. Subsection 95(1) defines the net income of a trust estate, while suparagraph 97(1)(a)(ii) provides details of the entitlement of a non-resident beneficiary to a share of the net income of the trust.