Presenting part two of a three part checklist from HHG Legal Group’s Tax Law Team.
Make sure you are aware of not only your tax planning opportunities but also your responsibilities before the end of this financial year
Trust distributions and resolutions
The trustees of any discretionary trust distributing income in the 2016 financial year must ensure that the trustee determination or resolution (determining which beneficiaries will receive income and capital distributions) are made on or before 30 June 2016. Although the ATO acknowledges that the record of the trustee’s determination can be prepared at a later date, we recommend that these records (typically trustee’s minutes) be prepared on or before 30 June 2016. The trustee’s determination must also be made in accordance with the terms of the trust deed.
The trust accounts do not, however, need to be prepared by 30 June 2016, so the trustee’s determination does not need to specify an actual dollar amount for it to be effective in making the beneficiary presently entitled (unless the trust deed specifically requires it).
Definition of income
If your discretionary trust has been updated to take into account the High Court decision in Bamford it may allow the trustee to determine whether “income” is calculated under section 95 of the Income Tax Assessment Act 1936 or by some other means. If this is the case, we recommend that the trustee’s determination confirm how trust “income” was calculated.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.