News & Events

End of Year 2011 Issues to Consider

From 1 July 2010 most beneficiaries of closely held trusts are to provide their tax file number (TFN) to the trustee prior to receiving a distribution.
Failure to provide a TFN will result in tax being withheld from the distribution (at 46.5%).
Non-residents and those under a legal disability (such as minors) are excluded.

Loans or financial assistance by private companies to shareholders or their associates can be deemed to be a dividend.
The definition of associate includes trusts, companies and partnerships controlled by shareholders or their relatives.
Loans for income producing purposes can be caught by Division 7A.
Ensure you have loan agreements for all loans.
Ensure minimum repayment amounts are paid.
The private use of company owned assets is now assessable under Division 7A.
Unpaid trust distributions made to private companies may attract Division 7A.

Unpaid trust distributions to private companies may be subject to Division 7A.
Ensure these unpaid distributions that were created between 16 December and 30 June 2010 are: - Placed in a sub-trust for the exclusive benefit of the company by 30 June 2011; - Turned into a complying loan by the lodgement due date for the 2011 trust tax return; or
Repaid by the lodgement due date for the 2011 trust tax return.

If trustees want to stream capital gains or franked dividends to particular beneficiaries they need to review their trust deeds before preparing their distribution minutes for the 2010/2011 tax year to ensure they have the ability to stream and also look at how the trust deed deals with the categories of income and capital gains and whether capital gains are included in the income of the trust as these will determine how the distribution statement is to be prepared
Trust deeds must allow allocation and accounts must show streamed distributions to beneficiaries.
Streaming only applies to franked dividends and capital gains - no other type of income can be streamed.