If you are the trustee of a trust (for example a family trust) that distributes income to beneficiaries, it’s time to dig out your trust deed and make sure that you make a complying trust resolution before 30 June. The resolution must clearly state the income entitlements of the trust’s beneficiaries for the current financial year.
The ATO has issued a reminder to trustees that the 30 June deadline is approaching and has provided helpful answers to some frequently asked questions about trustee resolutions, such as:
- When do trustees need to make resolutions?
- Is there a standard format for a resolution?
- Does a resolution have to be in writing?
- How should trustees calculate the income of the trust?
So, if you have a trust as part of your business structure, it’s time to:
- Dig out a complete copy of your trust deed.
- Look at the provisions relating to income distributions and make sure you understand how the trust income can or must be distributed amongst beneficiaries. Consult your professional legal adviser if you’re unsure of the meaning of any provisions in the trust deed.
- Consult with your professional tax adviser as to the relevant tax implications of any proposed income distributions. Make sure that special income such as capital gains or franked dividends are specifically taken into account by your tax adviser.
- Make sure that you make a resolution before any deadlines provided by the trust deed, or if there are no deadlines in the trust deed, by 30 June.
- Record the resolution clearly in writing. The resolution should be in a form that complies with any specific requirements prescribed by the trust deed and should be signed and dated.
- Make sure the resolution is kept safely with your trust records to enable correct reporting of the distributions on the trust’s tax return for the year ended 30 June 2013 and also on the tax returns of each of the beneficiaries.
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This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.
