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The ATO have recently begun reviewing new legislation regarding a trustee’s ability to distribute trust income across family members with lower tax rates.
We initially discussed these rulings with you in our blog post on 28th March. Since then, the ATO have received a significant amount of feedback from Accountants across Australia in regard to a trust operator’s tax planning.
The ATO's acting commissioner, Jeremy Hirschhorn has reiterated that there is no intention to capture "prudent ordinary tax planning transactions" and that if a beneficiary of a trust gets a benefit, then the ATO have no concerns.
However, the latest guidance suggests that the ATO will be looking to apply section 100A to some arrangements that are commonly used for tax planning purposes by family groups. The result is a much smaller boundary on what is acceptable to the ATO which means that some family trusts are at risk of higher tax liabilities and penalties.
If you have any questions, please don't hesitate to reach out to us at admin@smithshearer.com.au.
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