In the lead up to 30 June your trustee clients who wish to make beneficiaries presently entitled to trust income for the 2023 income year should ensure their trustee resolutions are effective. This includes where trustees may want to make beneficiaries specifically entitled to franked dividends and capital gains included in that income.
It's important that your trustee clients:
- Check their trust deed to ensure that the intended beneficiaries are within the class of persons who can be appointed trust income (or of trust capital, if they intend to stream a capital gain that is not income of their trust) and are not excluded from being beneficiaries.
- Comply with any requirements in the trust deed that concern how to validly appoint or distribute trust income to beneficiaries.
- Recognise that for tax law purposes, beneficiaries need to be made presently entitled to trust income by 30 June of the relevant year.
- Are aware that if they fail to do what is required in a trust deed, or fail to appoint income by 30 June, this may cause outcomes to arise that differ to what they intended. This could include other beneficiaries or the trustee being assessed on the relevant share of the trust's net (taxable) income. Where a trustee is assessed, this may be at the top rate of tax.
- Ensure that resolutions are unambiguous.
TD 2012/22 sets out examples that demonstrate the relevance of the trust deed and wording of trustee resolutions to the taxation of trust net income.
To hear more about trustee resolutions and other trust topics such as non-resident beneficiaries and present entitlement, join our trusts webinarExternal Link on 24 May at 11:00 am AEST. You will also have an opportunity to ask the panel questions.
In the lead up to 30 June it’s important that trustees ensure their resolutions are effective and are managed accordingly.