FAMILY MONEY Susan Hely
I keep coming across people who have set up a family trust – and they’re not always super-wealthy. Often, they have been advised to take advantage of the tax benefits that are unique to family trusts.
Peter Bembrick, a tax partner at HLB Mann Judd, is a big fan of family trusts. He says they can be a useful vehicle to hold family assets over a long time and allow multiple generations to build up wealth.
Family trusts are usually established as discretionary trusts, he says, meaning that the trustee has complete discretion over distributing the income and capital to various family members and associated people who are set out in the trust deed as eligible beneficiaries.
Family trusts have offered tax-effective income, in particular for children aged over 18 and for retirees. One of their most attractive features has been income splitting and streaming different classes of income to different beneficiaries.
The distributions could be varied in any way from year to year, and no beneficiary has a guaranteed right to receive distributions, providing the family with a high degree of flexibility over the way that the trust is managed.
How it will work now
But that advantage has been under the ATO’s microscope for several years. Finally, it has released its long-awaited detailed guidance on the way it will apply Section 100A of the tax legislation (relating to anti-avoidance) to distributions from family trusts.
The final legislation is due in the next few months.
This story is from the July 2022 edition of Money Magazine Australia.
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This story is from the July 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
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