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
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:
We are happy to assist you in preparation of your Trust Distribution Resolution.
Contact our office to get the process started.
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It’s a great headline isn’t it? Spend $100 and get a $120 tax deduction. Days after the Federal Budget announcement that businesses will be able to claim a 120% deduction for expenditure on training and technology costs, we started receiving marketing emails encouraging us to spend now to access the deduction.