The ATO hasncautioned taxpayers against arrangements that seek to minimise tax by creatingnartificial differences between the taxable net income and distributable incomenof closely held trusts. Deputy Commissioner Michael Cranston said the ATO isninvestigating arrangements where trustees are engineering a reduction in trustnincome to allow taxpayers to improperly gain favourable tax breaks, ornsometimes to pay no tax at all.
n
Although hennoted that many people use trust structures appropriately and within the law,nMr Cranston said the ATO has seen some trustees exploit the differences betweenntrust net income and distributable income to have the net income assessed tonindividuals and businesses that pay little or no tax, and allow others to enjoynthe economic benefits of the net income tax-free.
n
TIP: The ATO has identified problematic arrangementsnthrough the Trusts Taskforce’s ongoing monitoring and reviews, and will continuento look for similar arrangements using sophisticated analytics. Please contactnour office for further information.
n