The Trustee signs an Annual Family Trust Minute of Distribution. This is before the end of the financial year. It declares how Family Trust income is distributed for the current financial year.
The minutes allow distributions to all the income categories. For example, you can stream income (such as net capital gains and franked distributions) to specific beneficiaries. Our minutes includes comprehensive notes. There is also our law firm letter signing off on the Minutes.
At one time the ATO said that you could sign the Minutes up to two months after the end of the financial year. However, that is not the law. It was never the law. Make sure these Minutes are signed before 30 June. Out of an abundance of caution email a signed copy of the Minutes to your Accountant.
Minutes signed after 30 June are ineffective – and always have been. That means the default beneficiaries become ‘presently entitled’ to the income and get taxed on it. Alternatively, if there is no ‘default beneficiary’ then the Trustee is taxed on the trust’s income, at the highest marginal rate (section 99A Income Tax Assessment Act 1936).
Build and sign the Statement before the end of each financial year, otherwise, you pay extra tax.
Since 1994, as a tax lawyer, I have provided an Annual Family Trust Minute for each financial year. I attend a lot of ATO audits. My doctorate was in tax. The tax laws change. The ATO changes its mind. We prepare the Family Discretionary Trust Minute of Distribution that reflect those particular rules for each unique financial year.
If you wish to also prepare a Family Trust Distribution for another financial year then see the list here.
Build your document online by answering the questions. Put in your credit card details. Within seconds, your Trust Distribution Statement appears on your computer and is emailed to you. It includes:
That is ok. We have drafted our Distribution Minutes to allow for this. The distribution is:
Therefore, you don’t need to know the Trust’s income or the beneficiaries’ final income for the year.
Once you have built the document, there is a section for you to hand write the beneficiaries in.
You are dealing directly with a law firm’s website, therefore you:
You are supported by our 100% money back guarantee on the document you build.
The Australian Taxation Office (ATO) does not require and does not want to see your Distribution Statement. The ATO assumes you have complied with the law. The law requires that you have signed your Family Trust Distribution Statement before the end of the financial year. It is always open for the ATO to request a copy or the original of the duly signed Family Trust Distribution Statement. Make sure you have it. Make sure your Accountant also has a copy.
Update the Family Trust for Bamford streaming only:
Or, update Bamford streaming PLUS update the rest of the Deed:
Or update for Bamford streaming PLUS the Deed PLUS update the Appointor & Trustee:
Or just update the Trustee:
Or just update the Appointor:
To deal with Division 7A (loan or UPE from your company to the Family Trust):
Or, to forgive the ‘loan account’ and UPEs (loans from humans to Family Trust):
Change the name of your Family Trust:
To wind up and vest the Family Trust, when you no longer want it:
Telephone us for legal advice on building this document.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
Toll free: 1800 141 612
Mobile: 0477 796 959
Email: [email protected]
* the decision of the Full Federal Court in the Thomas case, which concerned the effect of a Supreme Court order relating to the purported distribution of franking credits separately from the dividends;
* issues that arise out of a power of amendment conferred by a discretionary trust deed, including the extension of the vesting date
* the ATO’s view of how an amount included in a beneficiary’s assessable income under section 99B ITAA97 is treated where the amount had its origin in a capital gain from non-taxable Australian property of a foreign trust
* the ATO’s taxpayer alert for arrangements designed to exploit the proportionate approach to the taxation of trust income
1. Does the trust deed require the distribution decision for an income year to be effected by a particular time and, if so, what is that time? (To be effective in creating a present entitlement, the distribution minute is made by 30 June (or such earlier time as required by the trust deed). Amend the Family Trust Deed if it requires a distribution minute after 30 June.) 2. Does the trust deed require the consent or approval of some person to a distribution of income, either generally or in particular circumstances? (Usually, it is the Guardian who consents.) 3. Has any distribution of income for the current income year already been made earlier in the income year? (If so, the distribution should be considered when drafting the final distribution minute. 4. Has a ‘family trust election’ been made? (In which case your class of beneficiaries who you can distribute to is extremely limited) 5. Are there any special income tax or CGT considerations that would mean that a distribution should or should not be made? (Consider:
• the CGT small business concession provisions • the trust loss provisions and, in particular, the pattern of distributions test • children with unstable marriages and defacto relationships
6. Does the trust deed permit the accumulation of income? (There can be tax advantages in not distributing certain income.) 7. Does the trust deed permit the characterisation of the otherwise revenue or capital nature of an amount? (If not update the Family Trust Deed to allow for the new rulings on Bamford’s case. 8. Is there a distribution to a company? (Build Division 7A Loan Deeds at www.legalconsolidated.com.au.) 9. What are the sources of the ordinary income and statutory income derived by the trust during the income year? (Is it better for different kinds of income or amounts (e.g. franked dividends or a capital gain) to be ‘streamed’?) 10. If a distribution is to be made to an exempt entity that is a beneficiary (charity), the anti-avoidance rule must be taken into account, as well as the fact that an exempt entity beneficiary is taken not to be presently entitled to the extent that, within two months after the end of the income year, it has neither been notified of its present entitlement nor has been paid its present entitlement. 11. If an asset is to be distributed in specie, does the distribution results in a CGT event? (Determine what the CGT consequences are. Consider trading stock or a depreciating asset. Is the beneficiary registered for GST for GSTD 2009/1.) 12. If the trust carried on a business of primary production, is it necessary to distribute income to ensure that a beneficiary is taken to carry on the business of primary production? 13. What are the TFN withholding rules for each beneficiary?
‘your resolution does not need to specify an actual dollar amount for the resolution to be effective in making a beneficiary presently entitled…’ (Trustees Resolutions QC 25912).The Resolution you are building states that a beneficiary gets the income up to their marginal tax rate, and then to someone else up to their marginal tax rate. As the ATO states:
‘A resolution is effective if it prescribes a clear methodology for calculating the entitlement …’
Telephone us for legal advice on building this document.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD Legal Consolidated Barristers and Solicitors National Australian law firm
National: 1800 141 612 Mobile: 0477 796 959 Email: [email protected] Skype: brettkennethdavies