EOFY – Family Trust Resolutions & Signatures

As we approach the end of the financial year, it is very important to consider the tax impacts of certain decisions that are made by your family trust—namely, the signing off on the family trust resolutions.

According to taxation law, the beneficiaries of a family trust need to be able to receive the income from the trust they are owed (their present entitlement) before the end of the financial year. If the beneficiaries do not receive that income when they are supposed to, then the trustee of the trust will pay 47% tax on every dollar of earnings.

The way to make the beneficiaries presently entitled is to have the trustees prepare a resolution that details how much of the profit of the trust each person will get. This must be done before it is known what the profit will be.

Many areas allow for the electronic signing of documents to make it easier for those involved. There’s less hassle in being physically present, it can be done at any time, and it gives a precise time for dating the document.

However, if you wish to sign your trustees’ resolutions electronically, it is impossible to back-date documents (not that, of course, you ever would). You must work out your family trust distributions before 30th June so that you can electronically sign your resolutions before 30 June (and have this reflected in the digital information).

As the Australian Taxation Office has begun a closer examination of family trusts, ensure that yours is up to standards. Lee and Lee can assist with preparing the resolutions, and as long as they’re electronically signed before the 30th of June, there can be no dispute that it was done before the end of the financial year, thus avoiding excessive tax implications

Approaching the end of 2023, let’s review your trust income and potential beneficiaries’ earnings. We provide expert assistance in evaluating distributions, ensuring your financial success. We want to help you achieve the best result.

The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

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