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Trust Tax Return

  • Minimise Your Tax Liability
  • Expert Tax Agents
  • Avoid late Payment Penalty

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If you are a business owner who has set up a trust, you need to be aware of the specific tax obligations that come with this arrangement. One of the most important of these is the trust tax return, which is a document that must be lodged with the Australian Taxation Office (ATO) each year.

The trust tax return provides important information about the trust’s income, deductions, credits, and other financial details that the ATO needs to assess its tax liability.

Do I Need to Lodge Trust Tax Return?

In Australia, the obligation to lodge a trust tax return falls on the trustee of the trust. The trustee is responsible for managing the affairs of the trust, including its tax obligations. Therefore, if you are the trustee of a trust, you will typically be required to lodge a trust tax return.

It’s important to note that not all trusts are required to lodge a tax return. Trusts that meet the following criteria are generally exempt from lodging a tax return:

Business Owners

If you own a business and have a trust to manage income or assets, you need to lodge a trust tax return to comply with tax regulations.

  • If the business is structured as a trust entity
  • If the trust generated income during the financial year
  • If the trust distributed income to beneficiaries during the financial year

Investors

As an investor using trusts or managed schemes, check if you must lodge a trust tax return to meet tax obligations accurately.

  • Investments or properties under trust
  • If the trust distributes income to you as an investor
  • If you invest through a trust (e.g., a managed investment scheme or unit trust)
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Key Taxes Reported in a Trust Tax Return

When filing a tax return for a trust in Australia, it’s important to understand the key taxes that must be reported. Trusts are subject to various tax obligations, including income tax, capital gains tax, goods and services tax, fringe benefits tax, and PAYG withholding. By accurately reporting these taxes, trustees can ensure compliance with Australian tax laws.

Income Tax

Trusts are generally subject to a 47.5% tax rate on their assessable income, which includes income generated from investments, business activities, or rental properties when it is not distributed to the beneficiaries. However, when the income is distributed to the beneficiaries, the beneficiaries become responsible for reporting it on their personal tax returns.

Capital Gains Tax (CGT)

If a trust sells assets such as property, shares, or other investments and makes a profit (capital gain), it may be liable for Capital Gains Tax. CGT is calculated based on the difference between the purchase price and the selling price of the asset. However, if the trust holds the asset for more than 12 months, it might be eligible for a CGT discount, reducing the taxable amount of the capital gain. Beneficiaries may also have CGT obligations if they receive a distribution of capital gains from the trust.

Goods and Services Tax (GST)

If the trust is registered for GST, it must report the GST it has collected on sales and claim GST credits for expenses. The trust reports its GST obligations on the Business Activity Statement (BAS) rather than the tax return.

Fringe Benefits Tax (FBT)

If the trust provides non-cash benefits to employees or associates, such as company cars or private health insurance, it may be liable for FBT. FBT is separate from income tax and must be reported on the trust’s tax return.

Pay As You Go (PAYG) Withholding

If the trust has employees or makes certain payments to contractors, it may be required to withhold tax from their payments and remit it to the Australian Taxation Office (ATO). The trust must report the withheld amounts on its tax return.

These are some of the key taxes reported in a trust tax return in Australia. However, it’s important to note that tax laws can be complex, and it’s recommended to consult with a qualified tax professional or seek guidance from the ATO for specific tax obligations related to your trust.

Trust Tax Return Due Date For Lodgment and Payment

At TMS Financials, we specialise in simplifying the management of trust tax returns for business owners and investors. With our extensive expertise and diligent approach, you can rest assured that your trust tax return will be prepared and lodged promptly, fully compliant with ATO requirements.

Key Lodgment Due Dates for Trust Tax Returns in Australia

Navigating the nuances of Australia’s trust tax return lodgment can be intricate, but we’re here to guide you. Our expert tax accounting firm has in-depth knowledge of the key dates for Australian trust tax return lodgment:

Trust Income Tax Payment Dates in Australia

Efficient management of your trust income tax payment schedule in Australia is key to a smooth and stress-free financial journey. To aid your understanding, we’ve broken down the essential payment due dates based on the timing of your lodgment:

Do I need a tax agent for Trust Tax Return Lodgment?

Navigating the complexities of trust tax returns in Australia can be challenging, particularly for individuals who lack expertise in taxation and trust laws. In such cases, enlisting the services of a qualified tax agent can be immensely beneficial. A tax agent specialising in trusts can provide valuable assistance and guidance throughout the trust tax return process.

Yes, an Australian Tax Agent Can Optimise Deductions under Australian Trust Tax Laws

At TMS Financials, our experienced CPA professionals are well-versed in maximising deductions under Australian trust tax laws. As part of our comprehensive service, we scrutinise every detail of your trust’s financial activities. Through this process, we identify all available tax deduction opportunities specific to your situation, potentially saving you a significant amount on your annual tax bill. With our expertise, you can rest assured that your trust’s financial operations are compliant and cost-effective.

Yes, Engaging an Australian Tax Agent Allows for Extended Lodgement Deadlines

TMS Financials is not only about ensuring accuracy but also about offering you convenience and flexibility. When you engage us as your tax agent, you benefit from extended lodgement deadlines. This means you have more time to prepare, review, and submit your trust tax returns, reducing the rush and stress often associated with the tax period. Trust us to handle your tax lodgement – we have the knowledge, experience, and commitment to meet your specific needs.
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Late-lodgement and Other ATO penalties

When filing a trust tax return in Australia, it’s crucial to be aware of potential pitfalls that can lead to errors, penalties, and compliance issues. By understanding what to avoid, trustees can navigate the process with caution and ensure accurate reporting. Let’s explore common pitfalls that should be avoided when preparing a trust tax return, along with associated penalties.
FINE

Failure to Lodge (FTL)

The FTL is typically up to $900 on each late return / activity statements for individuals and small businesses, and $4,500 for large businesses.

PENALTY
FINE

Misclassification of Trust Distributions

Potential penalties ranges from 20 to 60 Penalty units. Cost per penalty unit is $313.

PENALTY

FINE

Late Lodgment

The amount of late lodgment penalty payable is $10 for each week or part of a week occurring after the due date and before the tax return is lodged. The maximum penalty is $200

PENALTY

FINE

Failure to Notify (FTN)

The FTN penalty is calculated at a rate of 8 per cent per annum of the amount not notified

PENALTY

Remember that penalties can vary depending on individual circumstances and the severity of the non-compliance. It’s essential to consult the official guidelines from the Australian Taxation Office (ATO) and consider seeking professional advice to ensure accuracy, compliance, and penalty avoidance.

How to Avoid Trust Tax Return Penalties

Preparing a trust tax return requires careful attention to detail, adherence to deadlines, and compliance with tax laws. To steer clear of potential errors, penalties, and non-compliance, trustees can follow certain strategies. In this section, we’ll discuss practical tips and best practices on how to avoid common pitfalls and navigate the trust tax return process smoothly
GOOD

Accurate and Complete Reporting

Maintain detailed records and reconcile financial statements with the tax return.

TIPS

GOOD

Comply with Lodgment Deadlines

Stay organised, plan ahead, and be aware of specific due dates. Set reminders or engage a tax professional to ensure timely lodgment

TIPS

GOOD

Maintain Adequate Record-Keeping

Utilise appropriate accounting systems and software for efficient record-keeping.

TIPS

GOOD

Seek Professional Guidance

Benefit from their guidance to ensure compliance and maximise tax benefits.

TIPS

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