Gavin Weller of Trekk Advisory Brisbane talks to a businessman about how to avoid tax penalties.
April 21, 2020 By Gavin Weller

Avoid tax penalties by making your Trust Distribution Resolutions

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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.

 

About Author

Gavin Weller

Gav is a Director of Trekk and operates from our Brisbane office - helping his client's in the advisory space in planning, strategy, structure, and taxation. He loves being able to work closely with both his clients and his team to help them achieve their goals. The best part of his job is that each new day is interesting, challenging and rewarding because of the great people he gets to work with. He is a massive fan of all sports and no doubt wishes he could have been a sports star or commentator. Unfortunately for him, he’s not good enough or impartial enough for either but he very much enjoys continuing to play soccer and tennis in the meantime. There's more to him than sports though... He loves music and going to gigs and theatre with his wife. Gav goes by the saying "Life is short – enjoy and appreciate this moment" and "Back yourself – some days you kick and some days you get kicked – that’s rugby". This metaphor for strength and resilience helps him get the best out of each day.

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