News

For the many business owners who operate their affairs through discretionary trusts, there have been further developments on the ATO’s planned crackdown on certain distributions. BACKSTORY To recap, the ATO in February updated its guidance around trust distributions made to adult children, corporate beneficiaries and entities that are carrying losses. Depending on the structure of…

The ATO has just updated its guidance around trust distributions made to adult children, corporate beneficiaries and entities that are carrying losses. Depending on the structure of these arrangements, there is a potential that the ATO may take an unfavourable view on what were previously understood to be legitimate arrangements. Background For various reasons, including…

Applying the “Retirement Exemption” in the CGT Small Business Concessions can be quite difficult – particularly where a company or trust makes the capital gain and the exemption is sought to be applied for the benefit of individual shareholders in the company or beneficiaries in the trust. In this case, the rules in s 152-325…

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…

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…

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…

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…

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…

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…

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…