TRUST TAX RETURN
INTRODUCTION
Trust is mostly an asset protection entity that also provides many tax benefits. It is basically a fiduciary/trust arrangement that allows a third entity to hold the assets for the beneficiary (ies). There are many different trust structures. The parties to a trust include trustee, beneficiary, settler & appointer (if applicable). Various different trusts provide various benefits. A trust tax return will hence vary depend on the kind of trust formed and also on the extent and extensiveness of recordkeeping, compliance and bookkeeping required. Also, the business activity or investment activity determines the benefits associated with forming and running the activity via a trust structure.
Classification of Trusts
Three common types of trusts include: Unit Trusts, Discretionary Trusts and Hybrid Trusts.
Trustee is the person who is in charge of the trust property which can be cash, property or any asset and there can be one of more trustees. Beneficiary is the person(s) who is entitled to receive a benefit from the trust either capital or income.
Why do we need to file trust tax return?
If there is any income generated from the Trust’s activities, all the income is generally distributed among beneficiaries and hence the trustee is required to prepare and lodge tax returns to the Australian Taxation Office. So basically, the trustee is responsible for managing the trust’s tax affairs and registering the trust in the tax system, lodging trust tax returns. The beneficiaries are generally liable to pay the tax.
What to file in a trust tax return?
After recording the income less expenses, the net income of a trust is its assessable income for the year, therefore trusts need to lodge and prepare the tax return. The net income of a trust is taxed in the hands of the beneficiaries which are distributed on the basis of their share of the trust’s income and it is the obligation of the trust to provide every single detail to beneficiary(ies) of their share of the net income, so that the beneficiaries can include this amount in their tax returns. Hence the beneficiaries will lodge the tax on the income received from trust.
Adult and company beneficiaries pay the tax on their share of the trust’s net income at the tax rates that apply to them. The trustee holds an authority to pay tax on behalf of minors on the basis of their share of the trust’s net income. The trustee is taxed on the undistributed trust income at the highest marginal rate.
How can we help? What is our fee for a trust tax return?
We can help prepare the trust tax return, carry out the required bookkeeping complete relevant schedules and distributions in accordance with the deed or based on the minutes. It is difficult to provide a fixed fee for trust tax returns, however if you get in touch with us, we should be able to pretty much advise about our fee over the phone. This is because a trust tax return is quite complex and sometimes takes a very long time. Rolling over balances for beneficiaries etc and maintaining of accounts is a crucial part of a trust tax return service. Depending on the scope of service requested, our fee will vary. For a basic understanding of our fee structure, we encourage you to visit the fee schedule from the link below:
https://www.a1accountants.com.au/price-list-2/
Still have questions?
Please contact our office on 0386091889, and one of our accountants shall be able to discuss your circumstances.
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