News

Trust distributions to non‐residents

Trust distributions to non‐residents

September 3, 2021

When an Australian trust makes a distribution to a non-resident beneficiary, it is often the case that the Australian trust is required to pay tax on the distribution. The trustee’s payment of tax on trust distributions to non-resident beneficiaries of an Australian trust is a tax collection security measure. It is a type of withholding…

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Trust losses: Keeping them in the family

August 10, 2021

Who can (and can’t) be part a family group for the purpose of making a family trust election (FTE)? As you can see by the diagram on this page, the ‘family group’ is dependent on the choice of the ‘test individual’. Once that person is chosen, the family group includes the person’s spouse, plus any…

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Trust distributions from a discretionary trust

August 10, 2021

The purpose of a trust is to separate the legal and beneficial ownership of assets. The legal ownership of the asset rests with the trustee. The beneficiaries benefit from the income that flows from the assets. A trust is not a legal entity. It is best described as a legal “relationship” that is controlled by…

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COVID 19 and trust liquidity issues

COVID-19 and trust liquidity issues

September 1, 2020

The ATO has highlighted the fact that due to COVID-19, a trustee may experience liquidity issues that may affect a trust’s ability to satisfy a beneficiary’s entitlement. This may happen where financial institutions impose restrictions that affect the way a trustee can deal with its assets. The ATO states that where a present entitlement arose…

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Distributions from a discretionary trust

Distributions from a discretionary trust

February 4, 2020

Photo by Wesley Tingey on Unsplash Distributions from trusts and the taxation of those distributions can be complex. This is an attempt to simplify the topic. The purpose of a trust is to separate the legal and beneficial ownership of assets. The legal ownership of the asset rests with the trustee. The beneficiaries benefit from…

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What you need to know about trust distribution resolutions

What you need to know about trust distribution resolutions

August 7, 2019

An essential starting point for consideration of trust income and how that income is to be distributed is to look at the trust deed. This very central document sets out the rules and expectations for the governance and operation of the trust and the powers that can be exercised by the trustee. Although it can…

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ATO actions on trusts and tax avoidance

ATO actions on trusts and tax avoidance

June 7, 2019

The ATO says that it recognises that most trusts are used appropriately and for legitimate purposes. It says it will continue to help those who make genuine mistakes or are uncertain about how the law applies to their circumstances. The ATO has a number of “trust risk rules” in place to identify higher risk compliance…

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Look before you leap with testamentary trusts

Look before you leap with testamentary trusts

May 4, 2018

A testamentary trust works in tandem with a will, and is similar to a discretionary trust, with the major difference being it only takes effect upon the death of the person who made the will. The trust can be funded by some or by all of your assets, and by payments derived as a consequence…

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Streaming trust capital gains and franked distributions: An overview

Streaming trust capital gains and franked distributions: An overview

July 4, 2017

The ATO has stated that a trust’s capital gains and franked distributions can, if not prevented by the trust deed, be streamed to beneficiaries for tax purposes by making these beneficiaries “specifically entitled” (more below) to the amounts. This allows beneficiaries to offset capital gains with their capital losses, apply applicable discounts and, subject to…

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The process (and pros and cons) of “electing” to be a family trust

The process (and pros and cons) of “electing” to be a family trust

February 3, 2017

Trusts are an important and very useful concept for managing one’s financial affairs, as well as estate planning. Atrust is established whenever there is a separation of the legal ownership (for example, the name appearing on a land title) from the beneficial (equitable) owner of an asset (in other words, the person that a court…

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