Unpaid trust distributions
Trust distributions to a private company for the 2013 tax year, which are unpaid at end of the 2014 tax year may be a Division 7A loan unless paid out to the company or converted to a complying Division 7A loan by the lodgement date of the company’s 2014 tax return, or held in sub-trust for the company by the lodgement date of the trust’s 2013 tax return (usually 15 May 2014).
The company must receive all income from the sub-trust.
Trust distributions and resolutions
Most discretionary trust deeds require distribution determinations for 30 June year end be made before 30 June, or maybe earlier.
Trustees must make these determinations prior to 30 June or the date in the deed.
TFN trust reporting
Trustees of resident discretionary trusts, family trusts and other closely held trusts are reminded they are required to report new beneficiaries’ tax file number (TFN) and certain personal information to the Tax Office. For 30 June 2014 the TFN report of new beneficiaries must generally be made to the Tax Office by 21 July 2014.
If the beneficiary has not provided their TFN to the trustee, the trustee will have to withhold tax from the distribution (at 46.5%).
Tax planning tip for trusts
To ensure you don’t miss the reporting of beneficiaries TFN’s we suggest you report the TFN’s of all likely beneficiaries of the trust now, even though they may not be receiving a distribution until a future year.