I have a client who operates their business under a discretionary trust. The net profit at the end of the financial year to be distributed to the beneficiaries was approximately $14K. However, one of the beneficiaries has taken out approximately $40K from the trust over the period. They are the only beneficiary who is currently receiving any distributions from the trust.
Can this debit beneficiary loan just be rolled forward to be offset against future distributions from the trust once there are profits available to do so? Or does the beneficiary need to declare this as income on their individual return?
If they are allowed to treat it as a loan are there any interest implications or minimum repayment amounts applicable as would be the case if it were a director taking money out of a company?
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