×

Taxing times – retrospective peril for trustees

In recent news on the tax front, the ATO have issued a draft ruling – TR 2012/D1 – which expresses the ATO’s view of what constitutes “income of the trust estate” in the context of Division 6 (ITAA 1936). This ruling will significantly impact trustees and in particular the way income from trusts is distributed, and is particularly timely with the end of the financial year almost upon us.


In Brief

This alert touches only the highlights of the ruling. Our tax specialists have composed an in-depth overview and analysis of the ruling, both of which are also posted on our News page for your convenience.

To comply with this ruling there are a number of important issues that trustees need to consider to ensure that income is appropriately distributed. These include:

  • The need to prepare resolutions to make beneficiaries “presently entitled” to the trust’s income by 30 June;
  • Reviewing the terms of the trust to determine what constitutes the “income of the trust”, having regard to the provisions of the deed and the Commissioner’s views as expressed in (draft) ruling TR 2012/D1;
  • The trustee’s duty to properly distribute or accumulate the income of the trust;
  • The franked distributions; and
  • If the trust has an unpaid distribution to a company, to ensure that the appropriate documentation, recording and payments comply with PS LA 2010/4 and TR 2010/3.

When finalised, the ruling will apply retrospectively and, accordingly, may apply to trust income for the current year.

What Next ?

In anticipation of the ruling being finalised we have developed a series of products and services tailored to delivering solutions to trustees and their advisers. For more information on tax solutions that suit you please don’t hesitate to contact us at tax@redchip.com.au.

Back to Articles
Redchip

Recent Articles

kaitlyn-baker-vZJdYl5JVXY-unsplash (1)
It’s official – Electronic Signing for Companies is here to stay!

Thankfully, on 22 February 2022, the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (the Act) received assent, amending the Corporations Act 2001 (Cth) (Corporations Act). This legislation clarifies and makes permanent the temporary relief measures which had in place 2020. The Act establishes a permanent mechanism which allows for: The electronic execution of documents […]

Read more
Untitled design
Who is responsible to repair damage following a natural disaster?

1. Rent Abatement In most cases, a lease will contain a clause whereby the tenant’s obligation to pay rent and other money under the lease (such as outgoings) is abated (either partially or completely) while the Premises are inaccessible or incapable of being occupied. 2. Reinstatement The Lease may contain specific obligations on the Landlord […]

Read more
pexels-nothing-ahead-4502492
Significant Changes to Residential Contracts

What are the changes?   Extension of Settlement Date Recently, there have been media reports of buyers losing their deposits because of a failure of their financial institutions to be able to settle on the settlement date. This change allows for either party to extend settlement date by up to 5 business days from the […]

Read more