How to access money in Trust

If we run a business using a Trust entity; is there any restrictions accessing funds in Trust?

Or what are the methods of accessing funds in the trust? (Before distribute profits to Trustees at the end of financial year)

 

Yes there are restrictions. What do you mean by access?

 

Trust distributions can be made during the year, not just at year end, right?

op you need to articulate what you want instead of randomly flicking through methods. Start with the objective.

 

The trustee would need the power to do this, but yes.

 

Hmmm a very good question. A distribution can be one of two concepts which can be mistakenly confused.

1. A tax distribution (defined by ITAA36 and ITAA97) which are tax concepts of "income".
2. A money distribution which may be a payment or assigning a entitlement or an advance.

Many discretionary trust deeds contain a clause which limits a trustee to determine and resolve distribution of net taxable income once annually. Not twice, not monthly. This follows tax law which limits a trust distribution to once annually based on the tax period. (s95 ITAA36 and Div 6 ITAA36) And some deeds prescribe really stupid onerous obligations which cant be met eg To assign through the accounting records elements of franked income etc....When franking isnt accounted for and may even be performed after 30 June. Such clauses arent practical or helpful. The correct approach is that a trustee may lend or advance sums in expectation of a future distribution which then must comply with the deed. Fortunately most disc deeds contain clauses which empower a trustee to assign, lend or advance trust property or money.

eg Through the year advances are made

Debit loan to beneficiary A
Credit Bank
....
and at year end credit absolute entitlement (ITAA36 calls it specifically entitled) to a share of net trust income to "loan to beneficiary A". Getting trust income distributions wrong may mean they are invalid...The trustee may be liable for tax on net income.

I would be ensuring I was relying on a tax practitioner who knows trusts well. Things like PSI and other concepts surrounding the trust may also need advice which affects these issues.