The tax rules concerning international trusts can produce harsh and unexpected results, warns Cooper Grace Ward partner Fletch Heinemann.
‘Even seemingly uncomplicated clients can fall victim to the ATO’s often tough approach to international trust recipients,’ Mr Heinemann said.
‘Advisers need to be aware of the broad scope of section 99B. Section 99B was introduced to stop Australian residents accumulating income in foreign trusts and subsequently distributing that income as untaxed capital in future income years. However, the provision operates more broadly.’
‘Distributions of capital from foreign trusts to Australian resident beneficiaries can produce alarming results. For example, if a child immigrates to Australia, and subsequently receives a capital distribution from their parents’ overseas trust, the starting point is that the capital amount is included in the child’s assessable income.’
‘We see many instances where clients have inadvertently triggered a section 99B issue. This is not surprising, as it requires an Australian resident beneficiary to be alert to the issue – before a capital distribution is made to them.’
Mr Heinemann will discuss the issues professional advisers need to be aware of at Cooper Grace Ward’s upcoming Adviser Training Day on Friday 24 March. Now in its eighth year, the Adviser Training Day is an intensive full-day technical conference hosted at the Mercure Hotel Brisbane, covering a range of topics designed to assist professional advisers in the issues they face on a day-to-day basis.
It will be accompanied by the Annual SMSF Conference on Thursday 23 March, which includes an SMSF Back to Basics session, update on the previous year in the SMSF space followed by an exclusive workshop addressing SMSF and estate planning issues after the 2016 Budget.
Both the Adviser Training Day and the Annual SMSF Conference will feature presentations from lawyers specialising in tax, revenue, superannuation, estate planning, workplace relations and other areas of commercial law.