Tax Planning Strategy #4: Trust Distributions Resolutions needed BEFORE 30 June 2015 – or pay up to 49% tax

If you have a Family Trust (also known as a Discretionary Trust) YOU NEED TO READ THIS!

 From the 2011/12 financial year, Trustees who distribute the income of a Trust through a resolution to beneficiaries must do so BEFORE the end of the financial year (June 30) for the resolution to be effective in determining who is to be assessed on the Trust’s income.

 If a Trustee fails to make a resolution to appoint the income of the Trust before the end of the financial year, the Trustee may be assessed by the ATO on the Trust income at the highest marginal tax rate of 49% rather than the intended beneficiary(s).

 Before 2012, the ATO allowed a certain amount of discretion as to when a resolution could be prepared.

 However, the ATO now takes the view that following the recent decision in Colonial First State Investments v FC of T 2011 ATC 20-235, trustees must now resolve to distribute the current year’s income on or before year end to ensure the beneficiary is presently entitled to trust income.

 What You Need to Do

 You need to provide us with a Profit & Loss Statement for each Family Trust that you have for the period 1 July 2014 to 31 March 2015. You also need to send us details of all income earned by all family members during the period 1 July 2014 to 31 March 2015, and your estimated income for the period 1 April 2015 to 30 June 2015, including any capital gains.

 We will then review all options for you, and recommend the most tax effective manner to distribute your Family Trust profits. We will then prepare the appropriate Trust Distribution Resolution for you to sign before 30 June 2015.

 Contact our office TODAY if you have any questions about this information.

 Your action now may save you thousands of dollars of unnecessary tax payments!

Nicolas Kyriopoulos

Peterson Group


P: 03 9381 1500

168 Edward Street, East Brunswick, Vic, 3057

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