New Family Trust Tax Rules – Will it Impact You?

• DJ Grigg
• 03/30/2022

New Family Trust Tax Rules – Will it 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 the ATO is examining. It is interested in agreements where parents benefit from trust income allocated to their children or other family members. This is, 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. We want to make sure your trust arrangements meet the ATO guidelines, so they don’t penalise you. We’ll examine your situation in detail against the new information. Then we will advise you if the ATO require you to make any changes to trust arrangements.

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 apply from 1 July 2022.

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