The ATO has reminded taxpayers that from the 2011-12 income year, all trustees who make beneficiaries entitled to trust income by way of a resolution must do so by 30 June 2012. However, it says if the trust deed requires a resolution to be made at a date before 30 June 2012, then trustees should comply with the requirements of the deed.
The ATO said the previous administrative practice which provided an extension to certain trustees to make resolutions by 31 August was withdrawn from September 2011 as a result of the Federal Court’s decision in Colonial First State Investments Ltd v FCT [2011] FCA 16.
For those intending to effectively stream capital gains or franked distributions for tax purposes, the ATO said a written record will be essential as the beneficiary can only be specifically entitled to franked dividends or capital gains if the entitlement is recorded in the written records of the trust. For franked dividends, this entitlement should be recorded by 30 June of each year, and for capital gains, the entitlement should be recorded by 31 August of each year, the ATO said.
[LTN 85, 7/5]