Important action required for trust distributions
beneficiary is generally determined by the deed of trust and beneficiaries cannot system does not recognise, in general terms, a difference between formal and . non-Spanish tax-resident, he will only be subject to tax in Spain on the. legal residence, with credits for taxes paid to other states as a nonresident. o Taxation of trust assets, and trust beneficiaries were located in other states, be- . As to a trust, the residence of a trust is either U.S. domestic or foreign. A trust that is treated as a separate taxpayer for U.S. income tax purposes.
Care is requried when a trustee or settlor moves to or from New Zealand As a result of New Zealandpolicy, which provides that tax liability turns on the residence of the beneficiary or settlor, there are certain tax planning opportunities and pitfalls to consider when acquiring or losing New Zealan dtax residence. However, as all jurisdictions do not tax trusts on the same basis, particular care must be taken whenever settlors or trustees migrate from New Zealand even if there will still be New Zealand resident trustees as the treatment of trusts in different jurisdictions can depend on factors that are different to those applied in New Zealand.
For example a trust could be a complying trust in New Zealand because of the presence of New Zealand resident settlors; but also subject to taxation in a foreign jurisdiction due to the presence of off-shore resident trustees. However, when there is no resident settlor, a trust that would otherwise be a complying trust can become a non-complying trust at the time of a distribution if the trustee has received any foreign source income while there has been no New Zealand resident settlor who is not a transitional resident.
This is obviously a significant disadvantage should complying status be lost. However, the corollary position is that any foreign sourced income is exempt income, once there is noNew Zealand resident settlor. Where a trust wishes to retain complying status it is possible for an election to be made so that a foreign trust can be treated as a complying trust in respect of income derived by the trustee from the date of the election.
It may also be possible to ensure a new settlement onto a trust by a person who will remain resident inNew Zealand. The best outcome for any trust that will be left with no New Zealandresident settlors will depend on a number of facts. Business Toolbox As 30 June approaches, it will be important to ensure that additional care is taken in relation to trusts. This is mainly because the ATO has increased the level of scrutiny that they apply to trusts in recent years.
With this in mind, we have set out below a listing of issues to be considered in respect of trusts at year end. Timing of trust distribution resolutions Trust distribution resolutions should be completed by the time required under the relevant trust deed. For most discretionary trusts, this will require the trustee to determine where the income will be appointed prior to midnight on 30 June.
Taxation of trust net income – non-resident beneficiaries
However, it is imperative that each trust deed is reviewed prior to making the resolution. Some deeds, particularly older deeds, require the trustee to make their decision regarding trust distributions prior to 30 June.
For example, we have identified some deeds which require the trustee to make a resolution by 27 June. This may mean that it is not possible to be precise when determining the amount that a beneficiary will be assessed on.
Make sure income or capital can be distributed to a particular beneficiary Prior to making an income or capital distribution in favour of a particular person or entity, the trust deed must be reviewed in order to ensure that that particular person is an eligible beneficiary of the trust.
Trust residence | Matters of Trust
If the trustee purports to make a distribution to a person who is not a valid beneficiary, the distribution is unlikely to be effective. Transitional provisions were also allowed in respect of the trust tax return, which allowed the TFN report to be lodged with the trust tax return.Trusts - Part 1 - the Trustee, the Settlor and the Beneficiary - white rabbit trust
However, what is clear is that a discretionary trust purchasing or holding land must carefully review their deed and consider the operation of the surcharges and taxes carefully, particularly in the context of our increasingly globalised world. This article is based on seminars presented in June This content is intended as a summary only and general overview. The material is not to be relied upon as legal advice. Readers should seek their own professional advice for their own circumstances.
Jonathan practices in all areas of direct and indirect tax with a particular focus on the taxation of trusts and corporate income tax and mergers and acquisitions.
Jonathan has also advised extensively on: Using his technical tax knowledge, Jonathan works with clients to obtain commercial and practical outcomes. He has particular experience in dealing with the Australian Taxation Office on complex tax issues in a dispute resolution context.
How SA trusts with offshore beneficiaries are taxed
Contact Jonathan at jortner abl. Kaitilin acts for a diverse range of clients, in high profile and complex tax audits and disputes across a wide range of taxation matters. Her clients include high wealth individuals and their businesses.
Kaitilin joined Arnold Bloch Leibler as a law graduate in She is currently undertaking a Master of Laws at The University of Melbourne, specialising in taxation law. Kaitilin is a frequent guest speaker at seminars for tax professionals and in-house tax seminars for clients and accounting firms and is the co-author of a number of tax related articles and publications. She has been appointed as the Australian tax reporter for the tax committee for the International Bar Association IBA for and Kaitilin has been recommended as a leading lawyer for tax in Australia by independent legal guide Legal Asia Pacific.
She has extensive experience dealing with the ATO and resolving disputes.