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If you are having difficulty paying your tax bill, please contact bookkeeping for small business experts so that they can negotiate a deferment or payment plan on your behalf with the ATO.
Trust Split
Arrangements
A family trust is frequently the subject of a trust split.
Allowing separate parts of the family group to have autonomous control of their
own part of the trust fund is a common justification for 'splitting' the trust.
Melbourne bookkeeper said that according to the Tax Commissioner, the split will
result in the creation of a new trust (due to the trustee's new personal
obligations and the addition of new rights to property) and a capital gains tax
event, which could result in a taxable capital gain.
TFN
Reporting
Trustees of closely owned trusts have various additional
reporting responsibilities in addition to the annual filing of the trust tax
return. The Australian Taxation Office (ATO) is now conducting a review of
trustees to ensure that they are complying with these requirements, including
the requirement to file TFN reports for beneficiaries.
Where TFN
Provided
Bookkeeper
service provider said that trustees are required to provide a TFN
report for each beneficiary who has provided their TFN to the trustee. The TFN
report must be submitted by the end of the month after the end of the quarter
in which the TFN was used. For example, if a beneficiary's TFN is received in
April, the trustee must file a TFN report by the end of July.
Where TFN
Not Provided
When a beneficiary fails to furnish a TFN, the trustee is
compelled to withhold and pay tax to the ATO at a rate of 47 percent on
payments made to the beneficiary. In addition, the trustee must provide an
annual report detailing any payments withheld.
Trust
Distributions
Timing of
Resolutions
Bookkeeping
Melbourne service providers said that by 30 June 2022, trustees (trustee company’ directors) must have
considered and decided on the distributions they want to make (the trust deed
may actually require this to be done prior). Trustees' decisions should be
memorialised in writing, preferably by June 30, 2022.
If appropriate resolutions are not in place by June 30, 2022,
the trust's taxable income may be assessed in the hands of a default
beneficiary (if the trust deed allows it) or the trustee (in which case the
highest marginal rate of tax would usually apply).
Anti-Avoidance
and ‘Round Robin’ Trust Distributions
Melbourne
bookkeeper said that the anti-avoidance rules prevent family trusts
from distributing to other closely owned trusts in a 'round robin' fashion.
When trust revenue is dispersed to one or more additional
trusts and then distributed back to the first trust, the regulations impose
penalty rates of tax. Prior to July 1, 2019, trusts that made a family trust
election were exempt from these regulations; however, this is no longer the
case.
Distributions
to Non-Resident Beneficiaries
Non-resident beneficiaries may be taxed in Australia on gains
linked to foreign assets that would not have been taxed if the gains had been
made directly by the beneficiary.
Bookkeeper
service provider said that even if a resident discretionary trust
makes a capital gain that is transferred to a non-resident beneficiary, even if
the gain is not related to Taxable Australian Property (TAP), and even if the
gain has a foreign source, the ATO expects the gain to be taxed in Australia.
Because non-resident beneficiaries will be taxed at non-resident rates and may
not be eligible for the full CGT discount, trustees must carefully examine this
when deciding on distributions for trusts with a mix of resident and non-resident
beneficiaries.
Bookkeeping
Melbourne professionals said that the ATO's decisions do not take into
account the possibility of double tax treaties being applied. Another factor to
consider when determining how payments are likely to be taxed in the hands of
non-resident beneficiaries is the source of funds.
Final Say
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