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AMIT trustee taxation and penalties
Under the new tax system, the trustee of an AMIT may be liable to pay tax or administrative penalties, or both, in certain circumstances.
The trustee of an AMIT will be liable to pay tax when:
- the amount of the determined member component of a particular character that relates to assessable income falls short of the member component of that character
- the amount of the determined member component of a particular character that relates to a tax offset exceeds the member component of that character
- the sum of the determined member components of a particular character that relate to assessable income, exempt income or non-assessable non-exempt income attributed to members is less than the determined trust component of that character
- the trustee has a trust component deficit of a character relating to a tax offset (other than a foreign income tax offset)
- unders of a particular character that relate to assessable income are not properly carried forward
- overs of a particular character that relate to a tax offset are not properly carried forward
- the Commissioner determines that the trustee of a managed investment trust derived non-arm’s length income.
The trustee of an AMIT will be liable to pay an amount in respect of an administrative penalty where:
- the trust has an under or an over for the base year which resulted from the intentional or reckless disregard of the law by the trustee
- the trustee fails to give AMIT Member Annual Statements (AMMA statements) to AMIT members by the required time
- the trustee enters into a scheme to derive non-arm’s length income
- the trustee fails to make certain information available to AMIT members for an income year.
Record-keeping requirements and retention
If you are carrying on a business, you must keep records relevant for any tax purpose that record and explain all transactions and other acts you are engaged in. Subsection 262A(2) of the ITAA 1936 prescribes the records to be kept, including:
- any documents relevant for the purpose of ascertaining the person’s income or expenditure
- documents containing particulars of any election, estimate, determination or calculation made by the person for tax purposes and, in the case of an estimate, determination or calculation, particulars showing the basis on which and the method by which the estimate, determination or calculation was made.
You must keep these records for your financial arrangements covered by the TOFA rules, even if you are not carrying on a business in relation to those arrangements.
Generally, the AMIT must keep all relevant records for five years after they were prepared or obtained, or five years after the completion of the transactions or acts to which they relate, whichever is the later. This period may be extended in certain circumstances. Keep records in writing and in English. You can keep them electronically as long as the records are in a form that we can access and understand to ascertain your tax liability. See TR 2005/9 Income tax: record keeping – electronic records.
Trust record retention
Keep the following records:
- a copy of the trust deed
- a copy of all trustee resolutions
- detailed statement of assets and liabilities
- the names in which business contracts are made
- a record of the name and contact details of the trustee at year end.
For more information on record keeping where losses are incurred, see TD 2007/2 Income tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under income tax law?
For more information on record keeping for CGT, see the Guide to capital gains tax 2016 and TD 2007/2 Income tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under the income tax law?
Record keeping for overseas transactions
Keep records of any overseas transactions in which the AMIT is involved, or has an interest, during the income year.
The involvement can be direct or indirect, for example, through individuals, trusts, companies or other entities. The interest can be vested or contingent and includes a case where the AMIT has direct or indirect control of:
- any income from sources outside Australia not disclosed elsewhere on the tax return, or
- any property, including money, situated outside Australia. Where this is the case keep a record of the:
- location and nature of the property
- name and address of any partnership, trust, business, company, or other entity in which the AMIT has an interest
- nature of the interest.
If an overseas interest was created by exercising any power of appointment, or if the AMIT had an ability to control or achieve control of overseas income or property, keep a record of the:
- location and nature of the property
- name and address of any partnership, trust, business, company, or other entity in which the trust has an interest.
If there is no trustee who is an Australian resident, the onus is on the public officer to keep this information.