Trust Bank Account Transactions to Beneficiary

Hi all,

Just a question relating to trust admin I'm looking to get clarification on.

Assuming a trust has profits that need to be distributed at the end of the financial year wondering if this means the funds do actually need to be transacted from the trust bank account to the beneficiary before June 30th? Or is it simply recorded as such in the tax return with the beneficiary taxed accordingly?

- reason is that I'd prefer to keep funds in the trust bank account to cover ongoing property expenses rather than having to have funds transacted to the beneficiary then gifted or loaned back to the trust account to cover expenses.

Thanks,
Max

 

What type of trust and what does your accountant say?

 

No. In fact some income may be received aftre 30 June eg final income fro ETFs and trust investmnets. A beneficiary should be made entitled by 30 June by a written decision of the trustee to resolve in a understood specific amounts or proportions.
Theremay be a requirement to credit the entitlement in the accounting records and in some cases this may need to be paid by the date the return is lodged.

 

All that is needed for tax purposes is to make someone presently entitled to the income. There may be other consequences if not paid over though

 

if you are using percentage distributions (which you definitely should be if distributing to a company) then the physical distribution wont be able to be made by 30th june anyway as you wont know the exact amounts until a later stage.

its critical the decision who to distribute to and in what proportions is done before 30th june however.

 

Could you please elaborate as to why percentage distributions should be the only way to distribute to a company?

 

It isnt the only basis but even if a specific sum is nominated this wont limit the sum being varied so a proportionate basis later applies if the net income was to change (eg disallowed deduction)

 

it has to do with division 7a