Miscellaneous 2006

Tax cases: Can loans to beneficiaries be taxable trust distributions?

Source: Taxation In Australia Journal Article

Published Date: 1 Nov 2006

 
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 [2006] 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.
Author Profile
Keith Harvey FTI

Author Profile
Vanessa Ritzinger

Sorry, this is subscriber only content.

To gain access to this material and much more - Subscribe Now.

(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).

Already a Subscriber? Login now

Details

The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))

("TTI")

The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

Copyright Statement

All materials provided on this site are protected by copyright and are owned by or licensed to TTI.

Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.

Tags

Miscellaneous 2006

Share this page