2014 Family Trust Resolutions Due by 30th June, or be liable for 45% Tax On Profit

Tax-Planning-Picture-in-book-470x240If you have a family trust that will distribute the net profit to beneficiaries for the 2014 financial year, you need to create and sign a trust resolution by the 30th June 2014.

A Trust Resolution is a statement of intention to distribute the profits to the beneficiaries you have nominated (made presently entitled to).

If you don’t draft and sign a resolution by the 30th of June 2014, the ATO will deem that nobody (beneficiaries are not presently entitled) to the profit being distributed and assess the trust under s99A of the Income Tax Assessment Act 1936 at the top marginal rate of 45%.

Sporting Clubs, Schools or religious institutions – not DGR (tax deductible), however tax exempt bodies

Any amounts make presently entitled to a tax exempt body will need to be disclosed in the trust resolutions and be either paid in full or provide a written notice to the tax exempt body within 2 months of the 30th June 2014.

Capital Gains or Franked Dividends

If you are expecting any Capital Gains or Franked Dividends to be received in the Trust and paid out to beneficiaries, theses amounts need to be specifically stated in dollar or percentage terms (%) and directed (streamed) to a beneficiary, or you will lose the right later for any tax planning as these amount will be distributed in the same proportion as ordinary taxable income. Bamford Case – Proportionate Approach

Please speak to your accountant ASAP if they have not already contacted you to draft a resolution for 2014.

If you need help – please contact our office before the 30th June 2014.