It’s dangerously close to EOFY, and that means The Financial Foreman needs to make you aware of any new tax-related information in the lead-up to 30 June 2022.
If you have a Discretionary Trust (also known as a Family Trust), it’s essential to keep reading because you need to be aware that you must complete your trust distribution resolutions before 30 June.
Why? Because if you don’t, you could end up paying extra tax of up to 47% of Trust profits.
How come this is happening?
If a Trustee fails to make a resolution to distribute the income of the Trust before the end of the financial year, the Trustee may be assessed by the Australian Taxation Office (ATO) on the Trust income at the highest marginal tax rate of 47%, rather than the intended beneficiary(s) being taxed at generally much lower rates.
See ATO Guidance: https://www.ato.gov.au/general/trusts/in-detail/trust-tax-time-toolkit/tax-issues-for-trusts—tips-and-traps/
The Financial Foreman to the rescue.
Even though preparing a trust distribution resolution can be quite complex, The Financial Foreman can help you comply with the trust taxation laws. By preparing and signing a Trust Distribution Resolution for each Discretionary Trust before 30 June 2022, your Trust will not be assessed 47% tax on your Trust profits. Instead, your intended beneficiaries will pay tax at their lower tax rates.
How the Financial Foreman can help
This is quite urgent and must be completed by 30 June 2022. To help achieve this benefit for you, here’s what we’ll need to do for each Discretionary Trust:
- Review your prior year 2021 Trust Distribution Resolution.
- Confirm with you the estimated Trust income of your Trust for the year ended 30 June 2022.
- Review your Trust Deed to ensure that the income definition and distribution clauses in your Trust Deed allow the proposed Trust Distribution Resolution for 30 June 2022.
- Advise you on the most tax-effective distribution of this estimated Trust income (normally done in a separate Tax Planning Meeting or Report).
- Prepare the Trust Distribution Resolution and ensure it is signed by the Trustees before 30 June 2022.
Our price for this work is $200 + GST for each Trust.
Three tips from The Financial Foreman
- Avoid paying 47% tax on your Trust profits
- Prepare and sign your Trust Distribution Resolution by 30 June 2022
- Get in touch with The Financial Foreman for advice and to help you prepare your Trust Distribution Resolution.
Remember: To avoid paying 47% tax on your Trust profits, you must complete your trust distribution resolutions before 30 June. Call Josh at The Financial Foreman on (08) 7129 4433 and set up an appointment today to prepare your Trust Distribution Resolution.