TSEM3784 - Trust income and gains: beneficiaries: payment from trust capital - exceptions to normal rule - annuity
The case of Jackson鈥檚 Trustees v CIR 25 TC 13 established that payments out of trust capital are income for tax purposes in the hands of a recipient where, by the terms of the relevant trust instrument regular payments out of capital are required to be made such that they can be treated as 鈥榓nnual payments鈥�. This is comparatively rare, but the beneficiary is in effect given an annuity payable wholly out of capital.
ITA/S494 would not apply as the payments would not be made at discretion.