The ATO's latest attacks on trusts and trust distributions

The release of TD 2022/D1, TR 2022/D1, PCG 2022/D1 and TA 2022/1 signals an aggressive new approach from the ATO on the application of the integrity rules contained in section 100A and Division 7A to arrangements involving trusts.

The ATO's latest attacks on trusts and trust distributions webinar explores who will be impacted and when, timing, determining a client's risk level, and the impact for those caught by the new stance.

A wide range of clients are going to be affected by the ATO’s new guidelines and it is vital to understand the risk level associated with common tax planning strategies that involve trust distributions. Many client groups are going to face higher tax bills as a result of these developments.

If the ATO applies section 100A to distributions that have been made by a trust then this generally results in the trustee being taxed at penalty rates on the relevant distributions. Also, the normal amendment period time limits don’t apply to section 100A so significant tax liabilities can accumulate when the ATO seeks to apply these provisions. Clients need to understand the level of risk associated with various tax planning strategies so that informed decisions can be made in relation to trust distributions.

The ATO’s guidance focuses on distributions made to adult children, corporate beneficiaries and entities with losses. Clients who have been distributing income to these beneficiaries might be surprised to discover that these distributions can potentially carry a significant level of risk, depending on how the arrangements are structured.