×

Are your clients’ franking credits at risk?

Woman With Family Sitting On Sofa In Background At Home

Have you closely considered whether your testamentary trust client requires a Family Trust Election (FTE)?

On 14 December 2013, the Government announced that it would not proceed with long-proposed amendments to relax the application of the “45 day holding rule” for beneficiaries of testamentary trusts. Therefore, an FTE will almost certainly be required if an income beneficiary of a testamentary trust wishes to claim an amount of franking credits exceeding the “small investor limit” ($5,000).


It is critical to remember that the $5,000 small investor limit takes into consideration franking credits from all sources – not just those forming part of the income distributed from the testamentary trust. Therefore, you should closely monitor income beneficiaries who derive franked dividends from multiple sources.

If you are considering putting an FTE in place for a testamentary trust, it is imperative to determine the most appropriate test individual . This selection is critical as it will determine the context of the family control test as well as which family members will be covered by the FTE.

For assistance in determining whether your client requires an FTE please speak to us on (07) 3223 6100.

Back to Articles
Redchip

Recent Articles

pexels-tobias-bjørkli-2119706
Transforming by choice

As the commercial space gathers momentum, businesses are jumping back into action. We’re enjoying seeing businesses continue to transform, but this time by choice.

Read more
pexels-kampus-production-7477723 (2)
The power of change – EPA changes increase control and clarity

Changes to Enduring Powers of Attorney (EPAs) came into effect on 30 November 2020, updating decades-old forms and adding provisions for some previously grey areas.

Read more
Director Resignation Photo by Sora Shimazaki from Pexels
Timing is everything – Three takeaways for resigning directors

New rules aimed at resigning directors have come into force and there is no longer any room for delay when it comes to lodging a resignation with ASIC.

Read more