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18 May 2015

If you have a Family Trust (also known as a Discretionary Trust) YOU NEED TO READ THIS!

From the 2011/12 financial year, Trustees who distribute the income of a Trust through a resolution to beneficiaries must do so BEFORE the end of the financial year (June 30) for the resolution to be effective in determining who is to be assessed on the Trust’s income.

If a Trustee fails to make a resolution to appoint the income of the Trust before the end of the financial year, the Trustee may be assessed by the ATO on the Trust income at the highest marginal tax rate of 49% rather than the intended beneficiary(s).

Before 2012, the ATO allowed a certain amount of discretion as to when a resolution could be prepared.

However, the ATO now takes the view that following the recent decision in Colonial First State Investments v FC of T 2011 ATC 20-235, trustees must now resolve to distribute the current year’s income on or before year end to ensure the beneficiary is presently entitled to trust income.

What You Need to DoThe Strategy behind Tax Planning

Provide your adviser with the relevant information including a Profit & Loss Statement for each Family Trust, income earned by all family members for the period 1 July 2014 to 31 March 2015 and your estimated income including any capital gains for the period 1 April 2015 to 30 June 2015  . Your adviser will then review all options for you, and recommend the most tax effective manner to distribute your Family Trust profits. The appropriate Trust Distribution Resolution will be prepared for you to sign before 30 June 2015.

Contact our office TODAY if you have any questions about this information.

Your action now may save you thousands of dollars of unnecessary tax payments!


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