Trusts Miscellaneous 2013

Failed trust distributions: Their tax consequences

Source: Taxation In Australia Journal Article

Published Date: 1 Oct 2013


There is a range of issues that can potentially undermine the intentions of a trustee when attempting to make distributions from the trust to beneficiaries. Failure to address methodically each potential issue in a timely way will lead to unintended outcomes that may be impossible to remedy once discovered. Further, there is increasing evidence that the Australian Taxation Office is acutely aware of many of the issues, and actively conducts compliance activity in the area. This article focuses on a number of the more common scenarios where purported distributions fail, in the context of a typical family discretionary trust with a range of beneficiaries, including family members and related trusts and companies. It also addresses the potential resulting tax consequences.

The article considers trust distributions to a “beneficiary”, distributions to particular beneficiaries, ATO requirements for tracing distributions, areas of ATO focus, and the ramifications of failed distributions.

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Trusts Miscellaneous 2013

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