Trust Tax Returns

Trusts are widely used for investment and business purposes. In Australia, their main objective is to provide a way for a person to pass on their personal or business assets to specific beneficiaries while shielding those assets from creditors. Generally, all trusts that derive income during the year must lodge an income tax return.

What is a Trust?

The term "trust" is typically used to describe various types of structures, each with its own regulations, procedures and tax implications. The main types are:

Family

Also called discretionary, this type of structure is commonly used by families operating a small business. It gives the trustee (the person legally responsible for operation of the trust) the ability to nominate how distributions are made.

Unit

Also called a fixed trust, this type of structure divides assets into units, much like shares in a company. Unlike family trusts, this structure does not give the trustee power to decide how assets are distributed.

Hybrid

As the name suggests, a hybrid structure has characteristics of both family and unit trusts. Often used where significant assets are involved, a hybrid structure has income and capital gains tax benefits.

Essentially, a trust can be thought of as an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries.

Completing a trust tax return

Trusts must have their own ABN and TFN and when lodging a trust account tax return must declare all deductions and income, including rental income, along with distributions made to beneficiaries. The amount of tax payable (if any) is largely determined by how income is distributed to those beneficiaries. Generally no tax is payable where all income has been distributed to adult resident beneficiaries.

Further information on trusts

• Tax may be payable depending in the wording of its deed
• GST registration is required where annual turnover is $75,000 or more ($150,000 for non-profit organisations)
• Tax concessions may be available
• A formal deed is required to setup a trust which outlines how it operates
• Superannuation must be paid for any of its employees. If the trustee is an employee they must be paid super as well

Given the different types of trusts, their different rules, regulations and tax implications, preparing a trust tax return can be a complicated and time consuming affair. For that reason, we recommended seeking help and professional advice.

Company as a trustee

Many trusts have a company act as a trustee. We will discuss with you the extra costs of having a company act as a trustee and the benefits or disadvantages.

Let Our Trust Account Experts Help You Today

At Peter Vickers Business Group we understand our clients’ needs and will help you to understand the different type of trusts. We can help you setup a trust as well as prepare and lodge ATO-compliant tax returns on time. We'll help you avoid penalties, meet deadlines, advise on extensions and generally reduce stress. And we'll make sure you claim all the deductions you are entitled to.

To find out more, visit one of our offices in Sydney or Windsor, or call our helpline today and one of our friendly staff will be happy to help.