New Family Trust Tax Rules – Will the Changes Impact You?

New Family Trust Tax Rules – Will the Changes Impact You?

If your trust pays adult-child beneficiaries, then you’ll need to know how the new ATO tax guidance rules could alter your beneficiary arrangements. The proposed changes won’t affect every small business operating through a trust arrangement, but it’s important to check that existing provisions meet the new requirements.

The ATO has released several related documents as a draft package that outlines specific taxpayer arrangements it is examining. It is interested in agreements where parents benefit from trust income allocated to their children or other family members, particularly where tax avoidance could be an issue, and family member beneficiaries are unaware of the provisions.

Another area of focus is the application of Division 7A rules to trusts that pay private companies, especially with related business entities and where the trust and company are part of the same family group.

Do Your Trust Distribution Arrangements Need to Change?

Trust beneficiary arrangements can be complex, and we want to make sure your trust arrangements meet the ATO guidelines so you don’t get penalised. We’ll examine your situation in detail against the new information and advise you if any changes to trust arrangements are required.

With the ATO’s stronger position on the taxation of trust distributions, it’s essential to review arrangements before the end of this financial year. The new rules are set to apply from 1 July 2022.

Book a tax planning session with us today, so we can make sure you’ve got the best beneficiary arrangement for your business and family.

About the author

Tony Nguyen is a natural-born leader, with a strategic, perceptive and methodical approach to providing effective accounting and tax solutions. Whether they be small, medium or large businesses, Tony supports his clients with services ranging from the highest level tax and business advice, to payroll and bookkeeping, and helping develop business across Australia and beyond.

Tony became a Director of DFK Laurence Varnay in 2017 and is a valuable addition to the team. With his high attention to detail, strong business sense and people-oriented nature, Tony builds trust with clients to become their trusted adviser through all stages of their business and financial journey.