As outlined in Client Alert no 6 – TFN Withholding for Closely held Trusts, the government introduced legislation which applies from 1 July 2010 which requires “closely held trusts” to withhold tax from distributions to beneficiaries where the beneficiary has not provided its tax file number (TFN) to the trust and the trust has not reported the TFN to the Australian Taxation Office (ATO) within a specified time frame.
Under the rules, where a beneficiary quotes its TFN to the trustee, the trustee is required to lodge a TFN report with the ATO by the last day in the month following the quarter in which the TFN was quoted.
What Trustees need to do
Based on the distributions resolved by the Trustee for the 2012 income year, each Trustee needs to confirm that all beneficiaries who are to receive a distribution in the 2012 income year have provided their TFN to the Trustee and that the Trustee has reported the beneficiary’s TFN to the ATO by 31 July 2012.
In particular, Trustees will need to make sure they have reported the TFN of any “new” beneficiaries to the ATO, including any new entities established during the 2012 income year and/or those beneficiaries who will be 18 for the first time by 30 June.
Provided the Trustee has reported a beneficiary’s TFN to the ATO by 31 July 2012 (or in a prior quarter), the trustee should be able to avoid any withholding of tax from distributions or any reporting thereof.
If you have any queries in respect to this matter please do not hesitate to contact your Blaze Acumen adviser.