Although there are two areas that trustees must consider:

1.    Having trustee resolutions concerning allocation / entitlement of trust income in place prior to 30 June; and
2.    The Australian Taxation Office (ATO) may consider a present entitlement / trust distribution not to be bono fide.

Concerning point 1 it is prudent to have your trustee resolutions in place and signed prior to the 30 June detailing the distribution of trust income.  Refer – year end trustee resolutions

Concerning point 2  if the ATO were to consider the trust distribution to be as a result of a reimbursement agreement then in could be made void and the income could be assessed in the hands of the trustee at the top marginal rate.  Refer to section 100A (1) Income Tax Assessment Act 1936 (ITAA 1936).

A reimbursement agreement is defined by any agreement or understanding providing for:
1.    The payment of money (including a payment by way of loan) to
2.    The transfer of property to, or
3.    The provision of services or any other benefits for any person other than the beneficiary…   

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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