As we approach the end of the financial year, the ATO has reminded trustees and their advisers they need to take care with resolutions relating to trust distributions. In order for beneficiaries to be made presently entitled to trust income (or specifically entitled to franked dividends and capital gains) there are a number of items that need to be checked.
The checklist published on the ATO website highlights the following key items:
- Checking that beneficiaries are valid income or capital beneficiaries of the trust under the terms of the trust deed;
- Ensuring that any procedures within the deed are followed to make beneficiaries presently entitled to income;
- Ensuring that beneficiaries are made presently entitled to the income by 30 June 2023 at the latest, or earlier if required by the trust deed;
- Being aware of the economic and tax impact if the trustee fails the appoint income by year-end; and
- Ensuring that resolutions are clear and unambiguous.
Given the ATO’s updated ATO guidance on the reimbursement agreement rules in section 100A and Division 7A means that this is an area where trustees and advisers need to take care.
More information
Trustee resolutions
