Avoid tax penalties by making your Trust Distribution Resolutions
Laura Miller, B.Com, CA.
26 April 2022
Do you have a Discretionary Trust (also known as a Family Trust)? If yes, this is important, so please keep reading!
In the lead-up to 30 June 2022, 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 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 we are doing to help you
Even though preparing a trust distribution resolution before the end of the financial year can be quite complex, we need to help you to comply with the trust taxation laws.
The steps we need to undertake on your behalf 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
- 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
- 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
Next Steps
Contact us today! The sooner we get started with preparing your 2021 Trust Distribution Resolutions, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax-saving strategies.
Imagine what you could do with your tax saved!
- Reduce your home loan
- Top up your Super
- Have a holiday
- Deposit for an Investment Property
- Pay for your children’s education
- Upgrade your Car
For more information on different Tax Planning strategies and free Tax Minimisation resources, head over here.
Article modified with current information – 24/4/22 This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountants at Trekk Advisory. Information is current at the date of issue and may change.
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If your making a profit, your paying tax… But you could be paying more than you need to! Implementing strategies to minimise the tax you pay means extra cash in your pocket. Imagine what you could do with tax saved?
- Reduce your home loan
- Top up your super
- Save for a holiday
- Deposit for an investment property
- Pay for kids education
- Upgrade your car
Free Guide: Strategies to minimise your business tax
Prepare for EOFY and minimise your business tax with our free guide on 10 strategies you can consider (plus a few more strategies thrown in!) to make sure you don’t pay more than you need to.
Considering strategies like taking advantage of ATO’s temporary full expensing scheme, reviewing owners wages, and super contributions to reduce personal income tax liabilities are all things that could make a big difference on your tax bill.
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