Recent changes to tax legislation and ATO administrative practices have ‘changed the game’ in relation to the resolutions by the trustee regarding the distribution of the income of the Trust.  It is crucial that the trustee of your trust considers and decides how the income of the trust for the 2012 year is to be distributed on or before 30 June.  Although this has always been important, extra emphasis must be applied to the resolution and the time it is documented from this year.

 In addition, the ATO used to allow decisions about trust distributions generally to be made after 30 June in some circumstances (subject to any specific terms in the trust deed, such as ‘default beneficiary’ clauses).  However, the ATO have stated that it can no longer allow this practice to continue.  In addition, they have said that they will be targeting some trusts this year and requiring them to provide their trust distribution resolutions by 7 July 2012.  Not all trusts will be subjected to this audit activity, but we recommend that as a matter of good practice, all our trust clients should consider these issues by 30 June and, ideally, put their trust resolutions in writing by 30 June every year going forward.

 Particular rules govern the trustee’s ability to stream capital gains and franked dividends and other income.

 If you wish to discuss the resolution or its ramifications, or about anything else in relation to your tax affairs, please contact our office.

For more information regarding the 2012 trust changes the following links may be of some assistance 

ATO                                        http://www.ato.gov.au/content/00320345.htm 

CPA  Australia                   http://www.cpaaustralia.com.au/cps/rde/xbcr/cpa-site/trusts-streaming-manual.pdf

 

 


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