Trusts – an evolving landscape.

In December of 2022, the Australian Taxation Office (ATO) released a tax ruling that provides their perspective on how tax laws apply to family or discretionary trusts. The guidance focuses on two main areas:

• rules regarding who receives trust distributions (and how those distributions are applied); and
• unpaid present entitlements, which are trust distributions that have been made but not yet paid to beneficiaries.

While there have been recent court cases highlighting issues surrounding trusts, leading to increasing complexity, trusts often remain a key and proper part of an asset structure due to the various benefits they offer including; access to capital gains discounts, elimination of capital gains on business assets, tax smoothing between years, and substantial asset protection for clients at risk.

However, the recent changes necessitate additional steps and considerations, as well as an increased focus on documentation and record-keeping. As such, it is crucial to make effective trust distributions and implement them to avoid ATO scrutiny.

The Solution

To this end, we are now facilitating a comprehensive solution that combines a meticulous technical trust deed review and amendment by an expert legal team with practical tools and strategies to deliver trust distributions with confidence.

The solution is Trust Evolve™.

Following an expert review of your Trust Deed and any amendments, a Trust Evolve™ report will contain a detailed explanation of any issues identified, amendment documents to ensure your trust deed remains relevant and up to date and a distribution guide providing commentary and further information.

The cost for this service starts at $1,100 inc. GST. This cost only includes legal disbursements and not our costs which, as they vary between each trust or family group, will be quoted on request.

The proposed solution is simple and efficient, providing a technical and comprehensive approach with legal expertise for complete confidence.

The industry has seen an influx of guidance relating to discretionary trusts in recent years, such as TR 2022/4 and PCG 2022/2, Owies, Minerva, Guardian AIT, and Demian. With trust distribution season coming soon, we are seeking solutions to mitigate trust deed risk, avoid ineffective trust distribution resolutions, protect client wealth and succession.

To assist with mitigating risks associated with trusts, contact us today to get this process started.