In a recent interview, an ATO senior tax counsel outlined the ATO view on trusts and the changes implemented by the ATO for the 2012 income tax year. Some points of note from the interview include:
- Trustee resolutions – The ATO says the previous concessional practice of allowing trustees to make beneficiaries presently entitled to income by 31 August in any particular year will not be reinstated. However, it says trustees will still have until 31 August to make beneficiaries specifically entitled to capital gains as long as another beneficiary is not already presently entitled to that gain.
- Compliance activities – The ATO says it intends to write to a group of around 1,200 trustees advising them of the need to make resolutions to distribute trust income by 30 June. Further, it says it may then select a limited number of those trustees for follow-up compliance activities after 30 June, where the trustees will be asked to provide details of their resolutions.
- Ruling on proportionate approach – The ATO says it is planning to issue a ruling on the proportionate approach. It says the Taxation Determination planned will contain a number of practical examples on the application of the proportionate approach to a particular set of facts.
- Closely held trust TFN withholding – The ATO says for the 2011-12 income year, when trustees make beneficiaries entitled to income, they will need to consider whether they have lodged a TFN report in respect of those beneficiaries.
- Changes to the 2011-12 trust return form – The ATO says it has implemented important changes to the trust income tax return which require trustees to disclose additional information including details of the trust income and total income of the trust estate.
[LTN 100, 25/5]