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A working beneficiary of a trust who has PAYG tax deducted from any payments or receives a superannuation contribution from the trust is considered to be a worker of the trust, as is any beneficiary (including a working director) who works for an incorporated trust. A working beneficiary who suffers a work-related injury is entitled to claim workers compensation. Certain trust distributions are counted as wages. Where a payment to a worker is made in lieu of wages (regardless of the terminology used to describe that payment) then the payment is counted as remuneration for the purposes of calculating workers compensation premiums. Distributions to beneficiaries who are not workers of the trust are not counted as wages. These individuals are not entitled to workers compensation in the event of an injury. A distribution to a worker as beneficiary under a trust constitutes wages to the extent that:
This remuneration would be regarded as wages for workers compensation purposes. A distribution is considered in lieu of wages when a ‘wages shortfall’ occurs and the distribution is made in the financial year in which the work is done or in the following year. A wages shortfall means less than reasonable remuneration has been declared for the work performed. Any distribution that compensates for a wages shortfall, up to the value of the shortfall, is considered to have been paid in lieu of wages, and must be counted as wages. For further information on trust distributions refer to Chapter D of the Wages definition manual.