Do you have a Discretionary Trust (also known as a Family Trust)?
If yes, you MUST keep reading!
In the lead-up to 30 June 2024, we want you to be aware that you need to complete your Trust Distribution Resolutions before 30 June. Why? To avoid paying extra tax of up to 47% of Trust profits.
How can this happen?
If a Trustee of a Trust fails to make a trust distribution 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 generally much lower tax rates.
WHAT YOUR ACCOUNTANT SHOULD BE DOING TO HELP YOU…
Even though preparing a Trust Distribution Resolution before the end of the financial year can be quite complex, it is important to comply with the trust taxation laws. We assist our client with this!
The steps needed include:
- Review of your prior year Trust Distribution Resolution
- Confirmation with you of the estimated Trust income of your Trust for the year ended 30 June 2024
- 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 2024
- Advice on the most tax-effective distribution of this estimated Trust income
- Preparation of Trust Distribution Resolution and ensuring it is signed by the Trustees PRIOR to 30 June 2024
SO, WHAT NEXT?
If your accountant isn’t helping you with this, contact us today! We are about to get started with preparing 2024 Trust Distribution Resolutions for our clients. A reminder that this needs to be done well before 30 June 2024 for sufficient time to implement tax-saving strategies.
