Trustee resolutions must be made by 30 June 2013 by all Trustees who intend on making beneficiaries of the trust entitled to trust income in the current year. Failure to make a valid resolution prior to 30 June may result in the trustee being assessed on the trust income and being assessed at a rate of 46.5% tax rather than beneficiaries being assessed at their marginal tax rate.
Trustees should consider the following prior to 30 June:
- Reviewing your trust deed to ensure the resolution is consistent with the terms of the trust deed
- Document a resolution prior to 30 June to establish a present entitlement for the beneficiaries to the trust income
- Ensuring the wording of your resolution is clear, unambiguous and robust enough to deal with all eventualities
- If you are ‘streaming’ capital gains and franked distributions that you have complied with both the trust deed and legislative requirements.
Finally, make sure the resolution is kept with your trust records to enable correct reporting of distributions in your Trust financials and tax return.