Trust Distribution Minutes: What you Need to know

By now trustees should have received the trust distribution minutes for 2015.

The trust distribution minutes determine the allocation of the trust’s net income to its beneficiaries for the relevant financial year. These distribution minutes are required by the ATO to be completed & signed by June 30 of that financial year. To be effective, the trust distribution minute needs to provide a clear methodology to determine the entitlement the trust’s beneficiaries have.

The consequences for being unable to produce this document to the ATO if requested is that the default beneficiary stated in the trust deed will be assessed on the total income of the trust. If there is no default beneficiary listed, the trustee is assessed at the highest marginal tax rate plus the Medicare levy. TD 2012/22 provides examples on how the trust distribution minute can impact the parties involved with a trust.

For further information regarding trust distribution minutes, refer to the ATO’s Resolution Checklist and TD 2012/22:

https://www.ato.gov.au/General/Trusts/In-detail/Trust-tax-time-toolkit/Resolutions-checklist/?page=2

https://www.ato.gov.au/General/Trusts/In-detail/Trust-tax-time-toolkit/Tax-issues-for-trusts—tips-and-traps-2014/

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