This a reminder of the recent changes made by the Australian Taxation Office in relation to discretionary trusts. Over the past 2 years the ATO has really been focusing on the compliance of trusts. Recently they have announced that:
- All Trustee distribution resolutions must be made before 30 June for each income year.
This means that for the 2012 Financial Year you will need to do a resolution that specifies how the ‘Trust Income’ will be distributed for the year ending 30 June 2012. This does not mean that exact amounts will need to be specified for each beneficiary, but it should specify either an amount in dollar terms or an amount as a percentage of trust income for all beneficiaries.
Ramifications if you do not have an appropriate resolution
If you do not have an appropriate trustee distribution resolution it may mean that the trustee will be assessed at the highest marginal tax rate on all of the taxable income of the trust.
The ATO has also stated that they will be conducting a review for compliance of such resolutions. They will be writing to a number of trustees in July 2012 and requesting a copy of their 2012 distribution resolution.
If you need any further assistance or have any queries in this regard or if you are contacted by the ATO as mentioned above please do not hesitate to contact our office.