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Tax for trust or company

Discussion in 'Accounting & Tax' started by Switchtronics, 6th Sep, 2016.

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  1. Switchtronics

    Switchtronics Active Member

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    Got a technical question on Company distribution say for 2014-2015 tax year. Say for example you have an established company "xyz" in 2012 and started generating enough income to use it in 2014 and you have a trust 'abc"
    Trust has a tfn conpany doesn't.
    Company has applied for a tfn in 2016. Company was previously established but has no tfn only trust does, can the company get distributed the income for the 2014-15 tax year if you haven't completed your tax?

    How long can it be held in the trust before it needs to be distributed?

    Are there any time limits on when it needs to be distributed? Does it need to be distributed within that financial year?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    A TFN is only a number and won't affect the tax.

    A trustee must make a beneficiary presently entitled to the income before the end of the financial year otherwise the trustee will be taxed at the top marginal tax rate - s99A I think.

    So did the trustee make a resolution to distribute income to the company and did this happen before 30 June 2015?

    Sounds like the trustee has a problem.
     
  3. Switchtronics

    Switchtronics Active Member

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    Thanks Terry. No the trustee didn't distribute the income was wondering if it could still be done before submitting the tax return to the company instead of distributing to a benefitary
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Nope - too late now.
     
  5. Switchtronics

    Switchtronics Active Member

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    So must be done personally? If it was noted in the company minutes for a distribution however the transfered didn't occur would it still be feasible?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The money doesn't necessarily need to be distributed, but the beneficiary, whether person or a company, will need to become presently entitled to the income.

    What does the trust deed say about paying distributions?

    Keep in mind the ATO is aware of people backdating documents.
     
  7. Switchtronics

    Switchtronics Active Member

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    Thanks Terry each year the amount decided to be distrubuted to the company was documented however not at present distributed as it is sitting in the trust bank account. As the company didn't have a tfn until 2016 was trying to ascertain if the company can receive the money for a previous tax year that as yet hasn't been submitted
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Well you should seek specific advice if your documentation is enough to make the company presently entitled.
     
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  9. Switchtronics

    Switchtronics Active Member

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    Thanks Terry