The Tax Institute would like to remind all members that this year trustees who are required to make resolutions to entitle beneficiaries to income of the trust estate will be required to make these resolutions by 30 June 2012 (or an earlier date if the trust deed so specifies).
As members will be aware, the ATO withdrew Income Tax Rulings IT 328 and IT 329 on 1 September 2011 - this administrative practice previously allowed trustees until 31 August following the end of the income year by which to make these resolutions. As members will recall, last year the ATO provided a once-off extension of the date by which to make resolutions (until 31 August 2011) in recognition of the complexity and confusion visited on tax practitioners and taxpayers by the recent streaming amendments. We would like to take this opportunity to remind members that no such extension applies this year.
All resolutions need to be made both in accordance with the terms of the trust deed and by 30 June (or the relevant date in the trust deed) for the 2011-12 income year. The resolution should establish which beneficiaries are presently entitled to the income of the trust.
Where there are capital gains, the streaming rules allow the trustee to make a beneficiary specifically entitled to that capital gain by 31 August. However, where the trust instrument treats all or part of the capital gain as income and there are default beneficiaries, the capital gain that is income should be appropriated on or before 30 June to ensure that a beneficiary has become specifically entitled to the entire capital gain.
The Tax Institute has published a range of materials to assist members in complying with these requirements, all of which can be accessed on our website. In addition, we remind you that members have complimentary access to The Tax Institute’s research service “TaxLine” You can also access further information published on the ATO's website.