Trust Distributions in Family Wealth Management – a recorded lunchtime online conference

Session 1: Trust Distributions and Section 100A: Where to from Here?

Since the ATO first issued its draft guidance material on section 100A early in 2022, tax advisers have had to come to grips with the realisation that the world of trust distributions has significantly changed. With the ATO finalising its guidance material, now is the time to take stock to ensure that future trust distributions can stand up to ATO scrutiny. This session is designed to assist, including:

• Identifying exclusions under “ordinary family or commercial dealing”, including:
  • the core test
  • factors that may lead to failing the test
• The ATO’s compliance approach (PCG 2022/2), including where it may be important to:
  • pay present entitlements within 2 years
  • place entitlements on commercial terms
• Dealing with distributions that involve adult children
• Consequences of falling foul of section 100A
• Lessons from recent cases
• Practical case studies

Session 2: Counting Down From 100: Is 99B the Next Sleeper to be Awakened?

Whilst section 100A was introduced into the Income Tax Assessment Act 1936 back in 1979, it would be fair to say it may have only become entrenched in some advisers’ minds in recent times. In that same year, section 99B relating to the receipt of trust income not previously subject to tax, was also introduced into the 1936 Act. Is this the next sleeper to catch advisers off guard, with a scope far broader than first realised? This session looks into finding out the answer, including:

• What type of income has the potential to attract section 99B?
• Is section 99C (interwoven with 99B) worded so broadly that advisers may be forgiven for saying “I didn’t see that coming”?
• The tax implications if section 99B applies, including
  • the interest component (sec. 102AAM ITAA 1936)
• Does section 99B extend to proceeds from a CGT event involving units in a foreign managed investment trust, including:
  • whether it makes a difference if the units are “redeemed” or “sold”?
• Interaction with disregarded capital gains in foreign trusts (TD 2017/23, TD 2017/24)
• How do the rules apply to foreign deceased estates?
• Strategies to reduce the risk of section 99B applying
• Practical examples

Session 3: Preventing Future Challenges: Creating Bullet-proof Trustee Distribution Resolutions 

A recent case of Owies has put into question whether the “discretionary” in a discretionary trust is a proper use of that term. This session reviews the impact this case may have on trustee distribution resolutions, including:

• What are the tax implications if a trust distribution is deemed invalid?
• To what extent does a trustee need to give “real and genuine consideration” to potential beneficiaries?
• What records should be maintained to support a trustee’s decision to distribute income or capital?
• How do you effectively change a trustee, appointor or guardian?
• How might Owies case affect pre 30 June trustee distribution resolutions?
• What lessons can trustees and advisors take from the case?
• The tax consequences where flexibility is removed and a trust is:
  • unitised (PBR 1051872353826)
  • arranged to hold particular assets for particular beneficiaries (TD 2012/21, TD 2019/14)
• Practical examples