Published on 01 Nov 06
by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
It is not uncommon for a discretionary trust to make interest free loans to beneficiaries of the trust that are repayable on demand. These loans or payments are usually treated as loans to the beneficiaries in the accounts of the trust. Although this is common practice careful consideration should be given to the nature of the transaction recorded as a loan to determine whether it is in fact a loan. In Weyers v Commissioner of Taxation  FCA 818 the Court found that approximately $1.8 million of loans to the beneficiaries of the trust were in fact assessable distributions of income. The circumstances surrounding the payment of $1.8 million to the beneficiaries indicated that there was never an intention to repay the money.
Keith, a Principal of Ambry Legal, specialises in tax advice principally in GST and Consolidation. He has presented a number of seminars for the Tax Institute on GST and written several GST articles for Taxation in Australia.
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