Do you have a Discretionary Trust? (also known as a Family Trust)
Yes – well, you need to complete your trust distribution resolutions before 30 June. Failure to do so could see you paying extra tax of up to 47% of Trust profits.
How can this happen?
If a Trustee of a Trust fails to make a resolution to distribute the income of the Trust before the end of the financial year, the Trustee may be assessed by the Australian Taxation Office (ATO) on the Trust income at the highest marginal tax rate of 47%, rather than the intended beneficiaries being taxed at a much lower tax rate.
Preparation of your Trust Distribution Resolution
Preparing a trust distribution resolutions can be quite complex. The steps that need to undertake are:
• Review of your prior year Trust Distribution Resolution
• Confirmation of the estimated income of your Trust for the end of the financial year at the 30 June
• Review of your Trust Deed to ensure that the income definition and distribution clauses in your Trust Deed allow the proposed Trust Distribution Resolution for 30 June
• Preparation of Trust Distribution Resolution and ensuring it is signed by the Trustees and lodged with the ATO PRIOR to 30 June 2022
Should you wish to complete your own Trust Distribution Resolution, we have a template we are happy to provide to you
However, there are massive benefits to working with a qualified and skilled accountant to work through this process. Primarily, they will be able to provide advice on the most tax effective distribution of this estimated Trust income. Failure to get this right, could cost you thousands of dollars in excess tax!
How can Walsh Accountants help?
Our team of Accountants are specialists in Business and Entrepreneurial Support providing sound and sensible advice; assisting our clients to never pay more tax than they need to.
If you would like some assistance in preparing your Trust Distribution Resolution or any tax planning or tax minimisation advice, we’re here to help you. Contact our office and speak with a member of our team – this discussion will complimentary and based on your personal circumstances.
Content in this article is general in nature and should not be taken as financial advice. If you are interested in this tax planning strategy, please contact our office to speak with one of our Accountants before proceeding any further.