Tax Planning Strategy #4: Trust Distributions Resolutions

Lan Nguyen, Chartered Accountant

Family trusts or discretionary trust are trusts where you can distribute with the choice of who receives the income.

Now, the people that can receive the income are the trusted beneficiaries, and in 2012 the tax department changed the laws and said that before the end of June, every person with a family trust or discretionary trust has to have a trust distribution resolution, agreed to and signed before the 30th of June of every year.  So we need to do that before the 30th of June, which is coming up.

So if you do have a family trust, we need to work out with you which beneficiaries of the trust would receive the income that the trust has made.  This involves tax planning.  This involves looking at how much your trust has made, who has earned what money within your family group, and who will be the best one to receive that income so you have the lower tax rate. Plus as well you don’t want to distribute income to a risky person who’s in business, it needs to go to an asset person that’s not involved in business.

Now they’re common terms that we’ve used when talking with all of you about setting up trusts. So please talk to us as soon as possible.  We need to work all this out and prepare the resolution well before the 30th of June and get you to sign it.  If you don’t, the tax department might decide to tax the trust up to 46.5% on its income.  Totally ridiculous, and we’re here to help you to avoid that, so please talk to us as soon as possible, and we can prepare this year’s trust distribution resolutions.

Written by Lan Nguyen, Chartered Accountant and Wealth Adviser from Success Accounting Group.

---

---

 Click here to make an appointment

 

comments powered by Disqus