Preparing trust minutes is a critical part of good governance and compliance for trustees. Here’s why they are so important.
Also known as a trust distribution resolution or minutes, trust minutes are formal records of a trustee’s decisions regarding how a trust’s income is distributed to its beneficiaries for a specific financial year.
These documents are crucial for ensuring the trust complies with tax laws and avoids penalties. They must be prepared and signed by the end of the financial year, or earlier if required by the trust deed. Distributions must be documented.
The advantages include safeguarding against disputes and minimising overall tax liability – one of the main goals of tax planning in trust distributions is to allocate income to beneficiaries in the most tax-efficient way.
The also mean avoiding deemed distributions or defaults – if no resolution is documented, the trust’s income may be taxed at the highest marginal rate or be deemed distributed in a way that doesn’t align with the trust’s intent.
Katrina Brennan, Principal, SRJ Walker Wayland Business Growth Advisors, Accountants and Auditors, Level 2/2 Innovation Parkway, Birtinya, 5301 9957, srjww.com.au
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