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T3 Allocation Worksheet

Updated: 2020-06-11

Choose a Beneficiary Allocation Method

Choose a method for allocating income to beneficiaries using the drop-down menus at the top of the Allocation worksheet. TaxCycle provides several different ways to automatically allocate income to beneficiaries (listed below), including one entirely manual method. You can also choose a different method for allocating capital gains income and all remaining income.

Make sure to choose the allocation method here first, before deciding which amounts to tax within the trust and allocate to beneficiaries on the S9WS.

Screen Capture: Choose Allocation Method

1. Allocate equally among all beneficiaries

TaxCycle takes the amounts and divides them equally between the beneficiaries.

If you choose this method, you do not need to enter any information in the table on the Allocation worksheet. Amounts are automatically assigned to the individual T3Ben slips.

2. Allocate by assigning allocation percentage, dollar or fraction to each beneficiary

TaxCycle uses the percent, dollar amount or fraction entered for each beneficiary to determine the amounts assigned to the individual T3Ben slips.

If you choose this method, you must complete the %, $ or fraction column in the table on the Allocation worksheet. A review message will appear to remind you to do this.

Useful tips:

  • Use the same type of value for each of the beneficiaries. Do not use a dollar amount for one beneficiary and then percent for the others.
  • Fractions are especially useful if you have a designated number units for each beneficiary (for example, a unit trust). Enter the number of units/fraction for each beneficiary. TaxCycle then creates a ratio from these numbers to allocate a dollar amount to each T3Ben.
  • Double-check the total at the bottom of the column to make sure it equals 100%, or the total units or dollars available for allocation.
3. First allocate specific amount(s) to one or more beneficiaries, then divide the remainder equally among all beneficiaries

TaxCycle first allocates the specific dollar amount to each beneficiary, then takes the remaining available amount and divides it equally among ALL beneficiaries.

If you choose this method, you must enter dollar amounts in the Specific amount column in the table on the Allocation worksheet. A review message will appear to remind you to do this.

Example

A trust has the following income:

  • Investment income: $30,000
  • Business income: $100,000
  • Total income: $130,000

There are two beneficiaries. The trust document/will requires the following distribution of the income.

  1. Pay the first $80,000 of any type of income to John
  2. Pay the next $24,000 of any type of income to Pamela
  3. Remainder income of $26,000 to be paid equally between John and Pamela, giving $13,000 to each.

On the Allocation worksheet:

  1. Choose option 3 as the allocation method.
  2. In the Specific amount column, allocate $80,000 in income to John and $24,000 to Pamela.

In the end, John and Pamela each receive the following in total:

Specific amount Remainder equally Total received % of income received
John $80,000 $13,000 $93,000 71.538%
Pamela $24,000 $13,000 $37,000 28.462%
TOTAL $104,000 $26,000 $130,000 100.000%

The above percentages are applied to each type of income.

Investment
Income
Business
Income
Total income
reported on T3 slip
John @ 71.538% $21,462 $71,538 $93,000
Pamela @ 28.462% $8,538 $28,462 $37,000
TOTAL $30,000 $100,000 $130,000
4. First allocate specific amount(s) to one or more beneficiaries, then allocate the remainder by entering %, $ or fraction

TaxCycle first allocates the specific dollar amount to each beneficiary, then takes the remaining available amount and allocates it using the specified percent, dollar amount or fraction entered.

If you choose this method, you must:

  • Enter dollar amounts in the Specific amount column in the table on the Allocation worksheet.
  • Complete the %, $ or fraction column on the Allocation worksheet to specify how to allocate the remainder.

Review messages will appear to remind you to do this.

Useful tips:

  • In the %, $ or fraction column, use the same type of value for each of the beneficiaries. Do not use a dollar amount for one beneficiary and then percent for the others.
  • Fractions are especially useful if you have a designated number units for each beneficiary (such as a unit trust). Enter the number of units/fractions for each beneficiary. TaxCycle then creates a ratio from these numbers to allocate a dollar amount to each beneficiary.
  • Double-check the total at the bottom of the column to make sure it equals 100%, or the total units or dollars available for allocation.

Example

A trust has the following income:

  • Investment income: $30,000
  • Business income: $100,000
  • Total income: $130,000

There are two beneficiaries. The trust document/will requires the following distribution of the income.

  1. Pay the first $80,000 of any type of income to John
  2. Pay the next $24,000 of any type of income to Pamela
  3. Remainder income of $26,000 to be paid 45% to John and 65% to Pamela, giving $11,700 and $14,300 to each respectively.

On the Allocation worksheet:

  1. Choose option 4 as the allocation method.
  2. In the Specific amount column, allocate $80,000 in income to John and $24,000 to Pamela.

In the end, John and Pamela each receive the following in total:

Specific amount Remainder
(
45% to John 5% to Pamela)
Total received % of income received
John $80,000 $11,700 $91,700 70.538%
Pamela $24,000 $14,300 $38,300 29.462%
TOTAL $104,000 $26,000 $130,000 100.000%

The above percentages are applied to each type of income.

Investment
Income
Business
Income
Total income
reported on T3 slip
John @ 70.538% $21,162 $70,538 $91,700
Pamela @ 29.462% $8,838 $29,462 $38,300
TOTAL $30,000 $100,000 $130,000
5. Manually allocate each type of income directly on the T3Ben

Choose this option to unlock the calculated fields on the individual T3Ben slips and enter the allocated amounts there.

A. Use the same method selected above for income allocation

For capital gains income only! In the second field on the Allocation worksheet, choose how to allocation capital gains income. Choose this option to simply continue the same allocation method as already selected (and explained above).

Choose a separate method to allocated capital gains to beneficiaries

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