Tax Tip 226: Trustee reporting and withholding obligations

There are various rules with trusts which can get trustees in trouble. One such rule is the TFN reporting rules.

The trustee must get the TFN of a beneficiary before the trustee makes a beneficiary presently entitled to income.

The trustee will need to withhold tax at the top margin tax rate and remit it to the ATO if the beneficiary has not disclosed their TFN to the trustee.

The trustee will be exposed to an amount of tax that is not withheld.

The Trustee needs to report the TFN to the ATO within one month of receiving the TFN.


Tax Agents should be very careful with this if they are advising trustees on their tax obligations.

And Trustees should also be very careful that they don’t become liable for someone else’s tax.

See

TFN report

https://www.ato.gov.au/assets/0/104/1909/2003/a1a126d3-cd35-44ac-901c-d74507f34fac.pdf

 

we do this for every single trust that is setup. Must be done the first quarter a distribution is made to a beneficiary.

I know many firms dont do this and should be

 

"The Trustee needs to report the TFN to the ATO within one month of receiving the TFN."

The report is due by the last day of the month following the end of the quarter in which the TFN was quoted.