S100A & Changes to Trust Distributions
An important development that will potentially affect the taxation of distributions being made by discretionary trusts, including family trusts.
The Australian Taxation Office have recently released several documents outlining their approach to the application of section 100A of the Tax Act.
Under these guidelines, there is potential for distributions which have been declared, but not paid, to the beneficiary of a Trust to be invalidated by the ATO and tax incurred by the Trustee at 47%.
The Tax Office have confirmed that they will focus their review of these guidelines from the 2023 Financial Year onwards, however, it is important to note that they can also be applied retrospectively.
It is important that you understand how these new changes may impact you and your Trust distribution arrangements.