Distributions from Trusts

  • Please ensure that a distribution resolution is made prior to 30 June 2021. Where resolutions are not made by year end, trust income may, depending on the circumstances, become taxable to the trustee at 47%.
  • Taxation Ruling,TR 2010/3 (Div 7A: trust entitlements) sets out the Commissioner’s view that, broadly, a loan will usually arise where a distribution has been declared to a private company beneficiary of a trust and that distribution remains unpaid. This is a departure from his long held view that such amounts are not to be considered loans.  It is possible for the Commissioner to deem the unpaid distribution to be a dividend assessable to the shareholders of the company or their associates.  In order to prevent the loan being deemed to be a dividend, there are a number of courses of action.  Please contact us for further details if required.
  • Consider whether a family trust election is required if planning to distribute franked dividends to beneficiaries. If a family trust election has previously been made, ensure that distributions are not made outside the family group otherwise Family Trust Distribution Tax may be payable.