Distribution from the trust

 Author: Bruce4Tax(Taxicorn)Taxicorn

19 Apr 2024

XYZ Pty Ltd - same shareholder and director as ABC Pty Ltd - can a distribution be done to XYZ Pty Ltd. How does client borrows the money back from the entity which will be tax paid amount ?

Maybe - depends whether XYZ is an eligible beneficiary, as set out in the beneficiary schedule of the trust deed. The loan back to the trust needs to comply with Div 7A

Entity 3 - VVV Pty Ltd Corporate Trustee ATF VVV Family Trust - same shareholder and director as ABC Pty Ltd - should the distribution be done to the Corporate trustee which doesnt have any TFN and ABN. Or should I be applying for the TFN ?

Maybe - depends whether XYZ is an eligible beneficiary, as set out in the beneficiary schedule of the trust deed. The loan back to the trust needs to comply with Div 7A

Depends on whether distribution is for company or trust.

Trustee company should always have a TFN

Entity 4 - SSS Pty Ltd - shareholder is VVV Pty Ltd 100% - any distribution to SSS Pty Ltd is going to the entity which will pay 25% tax rate and then retained earnings belong to VVV Pty Ltd - to be distributed to the shareholders of VVV Pty Ltd as franked dividends.

Maybe - depends whether XYZ is an eligible beneficiary, as set out in the beneficiary schedule of the trust deed. The loan back to the trust needs to comply with Div 7A

Would loan agreements needs to be in place between ABC Pty Ltd and other entities to borrow the funds back into ABC Pty Ltd ?

Yes - The loan back to the trust needs to comply with Div 7A

If client doesn't have funds to distribute in cash - what other options can client use.

Div 7A loans.

Trust are complex - Best to get proper advice, relevant to your circumstances, from your accountant.