Beneficiaries benefit from a trust by receiving income or capital. 

Trust income is accounted for as trustee income or beneficiary income.  Trust income that is to be paid to a beneficiary is not accounted for as trustee income first, as otherwise the income would be taxed twice.

Rules apply to the timing of beneficiary income.  These rules provide that income is beneficiary income if the income vests in or is paid to the beneficiary during the year the income is earned, or is paid to the beneficiary within six months of the end of that year.  Where the trust has a tax agent, the six month period is extended to twelve months.

Income vests in a beneficiary if the beneficiary has an immediate right to the income. 

Income paid to a child beneficiary can be paid to the child’s parents.

Commonly the payment of income is recorded in the trust’s accounts but is not necessarily physically transferred to the beneficiary.  Income accounts maintained by a trust are often referred to as current accounts.  The trustee of a trust is obliged to transfer a current account balance to a beneficiary if the beneficiary directs the trustee to do so.  This is because once income is credited to a beneficiary, the income belongs to the beneficiary.