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    AS Partners
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    Hi All

    Below is a letter i have sent out to my clients regarding the ATO’s impending target of Trusts. If you have neot received this form of advice from your accountant i would be giving him a call before 30 June to ask why they have not put a trustees resolution in place for the 2012 financial year. It could cost you a lot in unneccessary tax!

    As part of the ATO’s crack down on compliance they will be undertaking an educational campaign to make representatives of trustees aware that, from the 2012 income year, trustees who make beneficiaries entitled to trust income by way of resolution must do so by the end of an income year (30 June) for that to be effective in determining who is to be assessed on the trusts income.

    To date the ATO has withdrawn previous tax rulings which allowed certain trustees up to 31 August that followed the income year to appoint the income of the trust. The ATO takes the view that trustees must now resolve to distribute the current years income on or before years end – which is usually 30 June.

    It follows that in the absence of a default beneficiary clause (that will be determined in your trust deed), if a trustee fails to make a resolution to appoint the income of the trust before the end of an income year the trustee may be assessed on the trust income at the highest marginal tax rate rather than the intended beneficiary(s).

    With this, there is a general understanding that this campaign by the ATO will be followed up with some compliance activities post 30 June. This will include requests for a selected number of trustees to provide a copy of the trustee’s income resolutions that evidence the fact that the trustee appointed the income of the trust for the 2012 financial year before 30 June 2012.

    To ensure trustees’ are meeting these compliance obligations it is essential that you maintain up to date financial statements so an accurate trustee’s resolution can be prepared before 30 June 2012. We will be making appointments with all our clients to ensure that they have the relevant trustees declaration on file before 30 June so that in the case of a follow up from the ATO we can respond with the correct documentation to avoid the trust being taxed at the highest marginal tax rate.

    Craig Ball ca
    Bentley Partners Accountants
    [email protected]
    0400819456

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