If your trust pays adult-child beneficiaries, then you’ll need to know how the new ATO tax guidance rules could alter your beneficiary arrangements. The proposed changes won’t affect every small business operating through a trust arrangement, but it’s important to check that existing provisions meet the new requirements.
The ATO has released several related documents as a draft package that outlines specific taxpayer arrangements it is examining. It is particularly interested in agreements where parents benefit from trust income allocated to their children or other family members, particularly where tax avoidance could be an issue, and family member beneficiaries are unaware of the provisions.
Another area of focus is the application of Division 7A rules to trusts that pay private companies, especially with related business entities and where the trust and company are part of the same family group.
Do Your Trust Distribution Arrangements Need to Change?
Trust beneficiary arrangements can be complex. Make sure your trust arrangements meet the ATO guidelines so you don’t get penalised.
It is essential to review arrangements before the end of this financial year. The new rules are set to apply from 1 July 2022.
Talk to your accountant as bookkeepers aren’t allowed to give this sort of advice.
This post was originally written by BOMA and has been updated to make it more personal.
