Under fire are deals to disguise profits as losses, overseas tax scams and trustees playing fast and loose with the rules.
The trustee typically pays zero tax on income that flows through the trust, including capital gains and franked dividends. The income is distributed to the beneficiaries, who are taxed at their personal tax rates.
“The trust can distribute to whomever it likes so long as the person is a named beneficiary or a member of a designated class of beneficiary. “If the beneficiaries don’t need the money, it can be left in the trust.” A trust deed is an arrangement where a trustee, or company, holds assets in trust for its beneficiaries.
“The ATO will continue to target higher-risk trust arrangements in privately owned and wealthy groups. These are not ordinary arrangements or tax planning associated with genuine business or family dealings,” says an ATO spokesperson. Trusts are coming under increasing scrutiny from courts and tax authorities as their popularity pushes numbers to about 928,000 and assets of nearly $2.2 trillion, according to the ATO.This includes almost 745,000 discretionary trusts, with about 558,000 reporting assets totalling $836 billion in the 2019-2020 financial year, it says.on family trusts for years and has recently issued tax rulings, practical compliance guidelines and alerts to raise awareness of potential pitfalls and stop abuse.
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