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17 Jun 11 TFN report lodgment and closely held trusts

Members of the NTLG, ATPF and Lodgement Working Group have been advised that the ATO will be making special transitional arrangements around the application of the TFN withholding rules to closely held trusts. It is understood that a communication will be made to all agents in the coming days giving detailed advice on the special transitional arrangements.

By way of background, the TFN withholding rules for closely held trusts were introduced in June 2010. They seek to improve the integrity of the tax system by taking steps to prevent taxpayers from avoiding paying tax on distributions from closely held trusts. They require trustees to withhold amounts from distributions made to beneficiaries where they have not quoted their TFN to the trustee.  Where TFNs are quoted, trustees are required to provide the ATO with a TFN report.  Under the existing transitional arrangements, trustees who have an obligation to lodge a TFN report for the 2010/2011 year have the option of doing so when lodging their 2010 Trust tax return or by lodging a new TFN report by 31 July 2011.

After submissions from The Tax Institute and other professional bodies, the ATO has agreed to provide additional time for the lodgment of the new TFN report.  The due date of the TFN report for the 2010/2011 year will now be extended to 31 August 2011.

To be eligible for this concession, tax agents must lodge electronically their client’s:

  • TFN report (which is now available on the ATO website); and
  • 2011 Income tax return and all future income tax returns.  

This is a special concession will only be included in the Lodgment Program 2011-12. It is anticipated that normal due dates will apply for all future TFN reports.

The Tax Institute is pleased that the ATO has heeded the industry’s concerns and has implemented these additional concessional arrangements.

The Tax Institute would like to thank Robyn Jacobson FTIA (Cyntax Tax Training & Consulting) who has been closely involved in the consultation on these measures. Robyn has devoted a significant amount of time to the consultation and we have benefited from her practical and technical insights.


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