Trust Distribution Minutes
15 June 2016
TRUST DISTRIBUTION MINUTES – THEY'RE REQUIRED BEFORE 30 JUNE!
Do you have a family trust? The ATO have tightened the requirements around the distribution of income. If you don’t follow the rules, you could end up paying a lot more tax than you intended.
Background
Your discretionary trust’s distributable income is the net income for tax purposes which beneficiaries will be entitled to receive, in accordance with the trust deed (rules of the trust). The allocation of your trust’s net income for the current financial year needs to be determined before 30 June, and trust minutes are used to inform the ATO of the allocation. These decisions and Trust Minutes must be done before 30 June each year.
ATO legislation stipulates that distributable income should be calculated prior to 30 June, and should the ATO request verification, signed trust minutes of the trustee’s resolution in this regard are required. In abiding by the ATO legislation, your trust distribution can avoid default beneficiaries unexpectedly becoming 'presently entitled' to the income and being taxed on it, or if there is no default beneficiary, avoid the trustee being taxed at the highest marginal tax rate (47% as at 2018).
Valid trust distribution minutes must provide clear methodology of the determination of each beneficiary’s entitlement. Therefore, it is important that the minutes are prepared accurately and with reference to your trust.
How we can assist you
At Mulcahy & Co we work closely with our clients to assist in the preparation of trust minutes that comply with the ATO requirements.
Generally, this requires the preparation of draft interim financial statements for your trust. We then use these figures to estimate the trust’s final net profit and calculate your trust distribution percentages. We will then prepare your trust distribution minutes for you to sign.
Upon the resolution of your trust’s net (distributable) income for financial year ending 2018, written minutes of this resolution will ensure that the ATO will have the information available as to the specified beneficiaries’ entitlements, ensuring trust income is not automatically taxed at the top marginal rate after 30 June 2018.
What should you do?
Arrange a trustee meeting with Mulcahy & Co without delay, to discuss trust resolutions for net income distribution, particularly if there are franked dividends and capital gains to be considered.
If you would like more information or need to discuss this tax incentive in more detail, please contact your Mulcahy & Co Business Advisor on 1300 204 781.
Latest News
When it comes to financial planning, one of the most powerful, and often overlooked concepts is the relationship between human capital and physical (investment) capital.
Did you know our Financial Planning division engage a research partner to assist their advisors in keeping up to date with the latest information in local and international economics? The partner is InvestSense and Jonathan Tolub from InvestSense attended the recent Investment Committee Meeting held in the Ballarat office. Our Marketing division filmed and edited the 16 minute presentation and you can watch it below. To talk to one of our Financial Planners about the Share Market, contact us here.
When an older person needs aged care, decisions are often made quickly. Read more to find out why licensed aged care advice is so important.
Welcome back to the FS360 podcast brought to you by M Group, where we explore the human side of financial wellbeing - because money decisions are never just about numbers; they’re about life, resilience, and perspective. Host Gavin Nash welcomes Lynde Adams, financial planner and aged care professional in our Mildura office. Today’s conversation is one that really brings those themes together. We’re joined by Ben Pettingill and Mike Rolls, also known as Legless and Blind, who have lived experiences of navigating physical disability from a young age. These gentlemen are in town this week talking with community groups, business groups, schools and sporting clubs with their unique TALKIN TOUGH message. Today we’ll talk about resilience, mindset, and importantly—how those experiences shape the way we think about financial security and independence. Available on Apple Podcasts and Spotify in audio and video and also on our website below. See, listen and read more about Ben and Mike here: https://www.realliferesilience.com.au/
