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Trusts

  • Distribute all income – You need to make sure that you effectively distribute all income each year otherwise undistributed income may be taxed at 46.5%.
  • What constitutes trust income – A recent High Court case has challenged the historic advantages of using a trust to reduce the rate of tax that you pay. Nothing has been outlawed; the rules for some have just changed a little. It all depends on the wording of your trust deed as the deed dictates how trust income is defined and whether capital gains are treated as normal income or not.
  • How income is assessed – When some accounting expenses are not tax deductible, the net income of the trust for tax purposes exceeds its accounting income. Recent tax law resolved that the distribution of the taxable income must align proportionately with the distributions made for the accounting income. This can create a problem if you want to limit the income of some beneficiaries to a set dollar amount e.g. children under 18.
  • Unpaid present entitlements – If a trust has an unpaid present entitlement to a corporate beneficiary, complex tax issues arise. If you can, you should pay the entitlements back before you lodge the trust's income tax return.

Please contact your nearest Murray Nankivell office to book an appointment today to help us understand your specific situation and work with you to select the best strategies to help you minimise your tax bill.

The information on this website is general information only, and Murray Nankivell is, by means of this information, not rendering professional advice or services. This information has been prepared without considering your circumstances and you should seek specific tax advice about your own circumstances.

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Joel Thomas

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Joel Thomas
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