IMPORTANT – Trust Distribution Minutes to be completed before 30 June

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 each Financial Year you will need to do a resolution that specifies how the ‘Trust Income’ will be distributed for the year ending 30 June. 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.

ATO requests

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 as early as July each financial year requesting a copy of their last financial years distribution resolution.

If you need assistance or have any queries in this regard please do not hesitate to contact our office.