Section 100A – The Sleeper Awakes!

In draft rulings issued in February 2022 the ATO has targeted common transactions almost all trustees would have entered into and reversed long-held positions.

In the most significant development relating to the taxation of trusts for over a decade, on 23^rd of February 2022 the ATO issued four new guidance documents dealing with trust distributions. This seminar will dissect the 94 pages of guidance and identify what they mean for taxpayers and their advisers.

The ATO has issued a draft ruling and PCG dealing with s 100A, a draft determination in respect to sub-trusts and Division 7A and a Tax Alert dealing with trust distributions to adult children. These documents make it clear that an all-out assault on discretionary trusts is coming. The ATO is resurrecting the long dormant s 100A to challenge what has become standard trust practice where low-income adult beneficiaries exist or where it is desired to retain trust income and minimise the applicable the tax rate. Allied to this development, the accepted use of sub-trusts to avoid the application of Division 7A to unpaid present entitlements is to be effectively abandoned.

• Have you previously, or do you plan to, appoint income to beneficiaries where that income is to be applied for their benefit or withheld within the trust?
• Is there a corporate beneficiary where shares in the beneficiary are held by the trustee?

If you answered yes to either of these questions, then understanding the four guidance documents issued by the ATO on the 23^rd February 2022 is fundamentally important.

This session will dissect these guidance documents (and the recent decision on s 100A in Guardian’s case) and identify what they mean for distributions from trusts to date and future distributions. While the underlying law will be detailed, the focus of the seminar will be the impact on commonly performed transactions and as to what is now permissible. Case studies (of all too familiar scenarios) will be explored.

Note that the primary focus of the seminar will be on s100A with ancillary discussion only of the Division 7A draft determination.

Learning Outcomes:

Attendees will be able to answer:

• what the four new guidance documents mean for trust distributions?
• what transactions relating to trust distributions are now high risk?
• what are the features of transactions that remain acceptable?
• what are the start dates for the new guidance and what do they mean for past transactions?

Suited to:

Accountants, Tax Agents, Solicitors, Trustees and beneficiaries of discretionary trusts.

This On Demand includes: 

• a recording of the webinar Event which can be viewed multiple times
• a PDF of the presenter’s PowerPoint
• a verbatim Transcript
• any supporting documentation
• a CPD Certificate after successful completion of the Knowledge Quiz