Trust Distributions – Important to Get It Right

Hello Chasers,

If you have a discretionary family trust you will be well aware of the need to have your trust resolutions completed and signed before the 30th June 2024.

As trustees prepare for year-end distributions, they should do the following:

  • They should review the relevant trust deed and any amendments to ensure they are making decisions consistent with the terms of the deed. They should check that the trust has not vested, as this may impact distribution decisions.
  • They should consider who the intended beneficiaries are and their entitlement to income and capital under the trust deed. If the trustee has made a family trust election or interposed entity election, this may have a tax impact on distribution decisions.
  • Trustees should notify beneficiaries of their entitlements so that the beneficiaries can correctly report distributions in their tax returns, preventing trust income from being omitted.
  • Trustees should check any requirements under the trust deed governing the making of trustee resolutions, which may include a requirement that the resolution be in writing and the timing of when the resolution is required to be made. Note in any case that resolutions regarding distributions need to be made by the end of the income year; and
  • Trustees should consider whether the trust has any capital gains or franked

distributions they would like to stream to beneficiaries. Trustees should check that the trust deed allows for streaming. Subject to that, they should comply with the legislative requirements that relate to streaming distributions.

The ATO’s compliance activities often identify mistakes made by trustees that are the result of not following trust deeds or not checking family trust elections. Trustees can refer to the ‘checklist for trustees’ on the ATO’s website for further assistance in this regard.

We ensure that your Trust Resolutions are always completed after we have conducted your tax planning meeting so that they are prepared and signed before the 30th of June each financial year as required.

If you have any queries please contact our Team on 03-55612643.

Have a great day!

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