REMOVE this Red Portion before you finalise the Trustee Resolution
TRUST DISTRIBUTION RESOLUTION - 2014
Important Note: You and your Firm are entirely responsible for this Trust Distribution Resolution.
With recent changes to Trust Taxation Laws, we recommend that you seek legal advice about the appropriateness of any Trust Distribution Resolution if you are uncertain in any way about the appropriateness of this Resolution.
ChangeGPS accepts no duty of care or liability to you or anyone else regarding this template letter and ChangeGPS is not responsible to you or anyone else for any loss suffered in connection with the use of this template letter or any of its content.
Important Reminders:
· To stream franked dividends and capital gains, you will need to actually make resolutions by 30 June 2013.
· To stream franked dividends, you will need to record in the accounts or records of the trust ('records' includes distribution minutes) that a beneficiary is 'specifically entitled' to an amount of a franked dividend on or before 30 June 2013.
· To stream capital gains, you will need to record in the accounts or records of the trust that a beneficiary is specifically entitled to an amount of a capital gain by 30 June 2013.
· The priority issue is to check your Trust Deed to ensure that it enables the trustee to classify amounts of income by their source and make distributions of that classified income: this will be critical if a beneficiary is to be 'specifically entitled' to a capital gain or franked dividend, upon which the streaming amendments depend. It may or may not require amendment, and there are alternative strategies.
· Be wary of dealing with franking credit gross up amounts and non-deductible expenses, including under a ‘section 95’ income equalisation clause Draft Taxation Ruling TR 2012/D1.
· Under 18 – NOT Disabled or Receiving the income from a Testamentary Trust or Will
This distribution is used for Beneficiaries under the age of 18 that are not suffering a disability or receiving the income from a Testamentary Trust or Will. The sum of $416 should be applied as it is the maximum amount of non-excepted income for under 18 Australian residents and is usually received free of income tax.
· Under 18 – Disabled or Receiving the income from a Testamentary Trust or Will
This distribution is used for Beneficiaries under the age of 18 that suffering a disability or are receiving the income from a Testamentary Trust or Will. There is no restriction on the amount of income distributed for under 18 Australian residents and is taxed at rates applicable to over 18’s.
· Use percentages and ‘balance’ distributions to ensure all of the income and capital gains of the trust are effectively distributed by 30 June 2013.
· Do not make resolutions which change ‘in the event of a future amended assessment by the Commissioner of Taxation...’
· If the trust has a discount capital gain, make sure the total gross amount (i.e. the discount and non-discount parts) of the gain is distributed to the beneficiaries who are intended to be assessed on the capital gain.
HAVE YOU READ AND CHECKED THE TRUST DEED?
[INSERT COMPANY NAME][INSERT ACN/ARBN]
As Trustee For
[INSERT TRUST NAME]
MEMORANDUM OF RESOLUTIONS OF THE [DIRECTORS / TRUSTEES]
Income of the Trust: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, the income of the Trust for the year ending 30 June 2014 includes all amounts (including capital gains) taken into account in calculating the net income of the Trust as defined in Section 95(1) of the Income Tax Assessment Act 1936 less any franking credits included in the assessable income of the Trust under Section 207-35 ITAA 1997, and the income of the Trust available for distribution to beneficiaries is determined to be equal to the net income of the Trust as assessed or amended from time to time.
DELETE ROW IF NOT NECESSARY
Franked Distributions: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, in respect of the franked dividends received by the Trust during the year ended 30 June 2014, the following beneficiaries are in respect of the franked dividends specifically entitled to the share indicated (including franking credits):
Individual 1 / 50 / %
Individual 2 etc / 50 / %
IT WAS RESOLVED that the relevant amounts will be set aside in the Trust records for the absolute benefit of the [beneficiary / beneficiaries].
DELETE ROW IF NOT NECESSARY
Non-Discounted Capital Gains Distribution: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, in respect of the capital gain during the year ended 30 June 2014, the following beneficiaries are in respect of the capital gain specifically entitled to the share indicated and each beneficiary has an equivalent share of the “net financial benefit” that is referable to the capital gain:
Individual 1 / 50 / %
Individual 2 etc / 50 / %
IT WAS RESOLVED that the relevant amounts will be set aside in the Trust records for the absolute benefit of the [beneficiary / beneficiaries].
DELETE ROW IF NOT NECESSARY
Discounted Capital Gains Distribution: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, in respect of the discounted capital gain arising from the sale of an asset during the year ended 30 June 2014, the following beneficiaries are in respect of the discounted capital gain specifically entitled to the share indicated and each beneficiary has an equivalent share of the “net financial benefit” that is referable to the discounted capital gain:
Individual 1 / 50 / %
Individual 2 etc / 50 / %
IT WAS RESOLVED that the relevant amounts will be set aside in the Trust records for the absolute benefit of the [beneficiary / beneficiaries].
DELETE ROW IF NOT NECESSARY
Under 18 (No Disability / Testamentary or Will) Distribution: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, that income of Trust shall be distributed to beneficiaries as follows:
Child 1 / $ / 416 (max)
Child 2 etc / $ / 416 (max)
DELETE ROW IF NOT NECESSARY
Under 18 (Disability / Testamentary or Will) Distribution: / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, that income of Trust shall be distributed to beneficiaries as follows:
Child 1 / $ / x,xxx
Child 2 etc / $ / x,xxx
The Trustee notes that the beneficiary is a resident minor beneficiary under a legal disability.
Balance of Other Trust Income:
Note, this distribution doesn’t include the distribution of other income to a Child (under 18). These distributions are set out above. / IT WAS RESOLVED that in accordance with clause [Clause Number] of the Trust Deed, the remaining other income of Trust shall be distributed to:
Individual 1 / 50 / %
Individual 2 etc / 50 / %
OR USE THIS ALTERNATIVE RESOLUTION:
Individual 1 / $ / x,xxx
Individual 2 etc / $ / Balance, if any
IT WAS RESOLVED that the relevant amounts will be set aside in the Trust records for the absolute benefit of the [beneficiary / beneficiaries].
Prior Payments: / IT WAS RESOLVED that if any income of the trust has been paid to any beneficiary or beneficiaries during the year and prior to 30 June 2014, those amounts form part of the distributions made in accordance with the above resolutions and are not in addition to them.
Ratification of Trustees Actions: / IT WAS RESOLVED that the actions of the Trustee during the year be ratified and confirmed.
Signed by [the Trustees / all the Director(s) of the Company]:
______
[Insert Director’s Name Here]
[Insert Date – but no later than 30 June 2014]
______
[Insert Director’s Name Here]
[Insert Date – but no later than 30 June 2014]
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