Central Coast Mortgage Brokers

Trustee Resolutions Must Be Made By 30 June

The Tax Office has issued a fact sheet in relation to trustee resolutions and the requirement that such resolutions be made no later than 30 June 2013.

For a trustee that intends to make beneficiaries of the trust entitled to trust income by way of a resolution, the fact sheet will assist with ensuring compliance with all the necessary requirements.

What to consider before 30 June

The fact sheet provides guidance in relation to the following issues that trustees should consider before 30 June:

Do you have a complete copy of your trust deed?

trustee resolutions

A resolution must be consistent with the terms of your trust, so make sure you have a complete copy of your trust deed (including amendments).

You need to ensure that any resolution you make to distribute your trust’s income for the year is made in accordance with the terms of the trust deed.

When do you have to make your resolutions?

All trustees who make beneficiaries entitled to trust income by way of a resolution must do so by the end of an income year (30 June). This resolution will determine who is to be assessed on the trust’s taxable income.

If your trust deed requires your resolution to be made at a date before 30 June, you should comply with the requirements of the deed – for example, if the trust deed requires your resolution to be made by 28 June, then you should make your resolution by that date.

If your trust deed requires an earlier resolution, all references we make to 30 June should be read as the earlier date required by your deed.

Is there a standard format for a resolution?

No. As there are a wide variety of trust deeds with different requirements for trustee resolutions, we cannot provide a standard format.

The important thing is that your resolution must establish, in one or more beneficiaries, a present entitlement to the trust income by 30 June.

Does a resolution have to be in writing?

Whether the resolution must be recorded in writing will depend on the terms of our trust deed. However, a written record will provide better evidence of the resolution and avoid a later dispute (for example, with us or with relevant beneficiaries) as to whether any resolution was made by 30 June.

A written record will be essential if you want to effectively stream capital gains or franked distributions for tax purposes – this is because a beneficiary can only be specifically entitled to franked dividends or capital gains if this entitlement is recorded in writing in the records of the trust either:

  • by 30 June for franked dividends, or
  • by 31 August for capital gains.

A beneficiary cannot be made specifically entitled to a capital gain included in the income of the trust estate after 30 June if, as a result of the operation of the trust deed, another beneficiary (including a default beneficiary) was presently entitled to it.

Other things to take into consideration when preparing the trustee resolutions are:

  • How are the beneficiary entitlements defined?
  • Is the wording of your resolution clear and unambiguous?
  • Are conditions on the entitlements fully effective by 30 June?
  • How should you calculate the income of the trust?
  • Are you ‘streaming’ capital gains or franked distributions?
  • Are you seeking to ‘stream’ other types of income?

If you are a trustee and you make beneficiaries of a trust entitled to trust income by way of a resolution, it is important to make sure you are correctly complying with all the necessary requirements when making your trustee resolutions.

 

Contact Us

AIMS Accounting Service
22 Swindon Close
Lake Haven NSW 2263
Phone: 02 4392 8720

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