Mark Molesworth

ATO cracks down on trust distributions: Here’s what you need to know

Mark Molesworth
4 minute Read

The Australian Taxation Office’s (ATO) recently released guidance on section 100A contains much that challenges the ‘lore’ that has grown up around acceptable uses for trusts in Australia. 

Broadly, section 100A is an anti-avoidance provision that targets arrangements where a beneficiary is entitled to trust income, but the economic benefit is received by someone else as part of an agreement that is designed to reduce a person’s tax liability.

Interestingly, the ATO guidance has been released while there are live cases before the courts in relation to the application of section 100A. The guidance therefore also indicates the likely arguments that the ATO will be making in these cases, as well as in audits of taxpayers more generally.

How we got here

Trusts generally make income distribution declarations on or before June 30 each year.

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