PART 2: Trust distributions are under ATO attack, are you ready?

Last week we introduced section 100A and recommended that those who are assisting with trusts act immediately to manage the section 100A tax risk, as it is very much a live issue. 

This week, we continue our series and discuss the first primary defence to section 100A: “there was no beneficiary who had present entitlement to trust income or the presently entitled beneficiary was under a legal disability”.  As section 100A applies in a case where a beneficiary, who is not under a legal disability, becomes presently entitled to a share of the income of a trust estate,¹ a primary defence to section 100A is to show either that:

• the beneficiary who became presently entitled to the trust income was under a legal disability; or