Trust Distribution Resolutions - What you need to know before June 30

HomeInsights

Trust Distribution Resolutions.
What you need to know before June 30

What is the relevance of accounting to tax? Or maybe a better way to frame this question is to consider whether what we do in the accounts, or as part of the entity’s broader compliance activities, will impact the tax outcome. 

One area where a connection is clear is with respect to trust distributions. How a distribution resolution is worded directly impacts the tax liability. It is important not because it determines what is taxable but because it is the basis for determining where the tax liability falls.
 

Trust Distribution Minute
The net income of a trust is taxed in the hands of the beneficiaries (or the trustee on their behalf) based on their share of the trust's income (that is, the share they are 'presently entitled' to) regardless of when or whether the income is actually paid to them. The trustee must prepare a document known as the distribution minute to make the beneficiaries 'presently entitled' to the income as at 30 June and avoid the situation where the trustee is taxable, which is at the highest tax rate.

How SMART can assist with preparation of your Trust Distribution Minute

SMART Business Solutions can prepare your trust distribution minute on your behalf. If this service is not part of a tax planning service, the minute will be prepared based on the prior year distribution.

If your business has been growing, or you have experienced changes in the business or other personal & investment income, we strongly recommend you invest in our tax planning service which will enable us to give you proactive tax planning before June 30.

Whilst we always undertake tax optimisation when we complete your accounts, there will often be situations where we  do not have the same strategic opportunities after June 30.

We are often asked questions on these distribution minutes, as below:

 

Questions?

We are happy to assist you in preparation of your Trust Distribution Resolution.

Contact our office to get the process started.

CONTACT US CONTACT US


Related News

10 Nov

Retention payments and how to account for them

Whilst retention payments are very common in the building and construction industry we continually see them being incorrectly accounted for, or not accounted for, and therefore often overlooked, resulting in advance payment of taxes and/or lost income.


READ MORE READ MORE
9 Nov

100 Aussies: five charts on who earns, pays and owns

We are heading into a period of opening up the economy after COVID, with the need to repair the budget, an election looming by May 2022, the threat of inflation and a withdrawal of central bank stimulus.


READ MORE READ MORE
15 Sep

The Advantages of Commercial Real Estate

While commercial property is a little more difficult to understand than residential, it offers several significant advantages for investors.


READ MORE READ MORE