Introduction & Outline (0:57) 

Trusts: The basics (3:30)

• The concept – what are we really dealing with

• Understanding the parties to a trust and their roles

Reading the trust deed (4:18)

• The importance of the deed

• What to look for

• The impact of key elements of the deed

Who pays the tax (3:50)

• The tax implications when no beneficiary is presently entitled

• The special rules

• The tax implications for resident beneficiary presently entitled

• The tax rules for:

  • Minors

  • Legal disability

  • Non-resident beneficiaries

The key section (0:59)

• The importance of section 97 ITAA 1936

Present entitlement (3:18)

• What is a present entitlement?

• When is someone presently entitled?

• Income applied to other parties

• Disclaiming distributions

Income of the trust estate (3:40)

• Understanding what trust law income is (distributable income)

• The impact of the Commissioner of Taxation v Bamford

• Understanding the definitions in the deed (and what happens if there is not one)

Income of the trust (6:42)

• The ATO’s view of income of the trust (and how it has changed)

• What is included in the definition

• The implications of getting it wrong

• Worked Example - calculating income of the trust estate 

Net income for tax purposes (3:07)

• The definition – what’s included what’s excluded

• Treatment of non-resident trusts

• Worked example - calculating net income 

Distributable income v net income for tax purposes (5:43)

• What are beneficiaries actually entitled to?

• Using the proportionate approach 

• When taxable income is less or more than distributable income

• Tax planning - what to watch out for 

Quiz | Who is assessed when income distributed to the beneficiaries is more than taxable income (2:45)

• Quiz ABC Trust

• Quiz Answer ABC Trust 

Non-resident beneficiaries (6:48)

• When income is distributed to a non-resident

• Exclusions

• Withholding tax

• Worked example – tax impact on distributions to different types of beneficiaries 

Quiz | Managing distributions to non-residents (1:41)

• Quiz Orange Family Trust

• Quiz Answer Orange Family Trust

Non-resident trusts (5:01)

• What is and isn’t a resident trust estate

• What to watch out for

Distribution resolutions (13:40)

• Timing

• Steps to ensuring the distribution is effective

• Distribution resolution wording

• What can and can’t be done

Holding period rules (3:45)

• Applying the holding period rules

• Exemptions

Quiz | Franking credits in a discretionary trust (1:46)

• Quiz Smith Family Trust

• Quiz Answer Smith Family Trust

Tax exempt beneficiaries (2:44)

• How to distribute to tax exempt beneficiaries

• The timing impact

Streaming (9:15)

• What is it and what does it apply to

• The conditions to make streaming effective

• What happens when streaming is not effective

• Tax consequences of streaming

• When and why you would use streaming

Quiz | Streaming (2:06)

• Quiz Yellow Family Trust

• Quiz Yellow Smith Family Trust

TFN withholding (6.50)

• TFN withholding requirements and triggers

• The steps when TFN provided

• The steps when no TFN provided

• Exclusions

• TFN withholding timing

Quiz | TFN implications (2:29)

• Quiz Harold & Irene

• Quiz Answer Harold & Irene

Reference notes are provided with this module.