Receiving Payments or Assets from Foreign Trusts
Are you an Australian resident who has received a payment or asset from a foreign trust? Find out what steps you need to take to ensure you’re meeting all your tax obligations.
Understanding your tax obligations
Receiving money or assets from a foreign trust can lead to additional tax responsibilities due to the complex nature of the transaction and the involvement of various tax rules, all of which must be accurately reported and assessed for tax purposes. Here’s a breakdown of instances where these extra tax responsibilities could occur:
- Direct or indirect loans: If the foreign trust lends you money, either directly or through another entity.
- Payment to others: If the trust pays money to someone else on your behalf.
- Gifts from the Trust: If what seems like a gift from family members comes from the trust.
- Distribution or transfers: If the trust gives you money, shares or other assets.
To determine whether the amount must be included in your assessable income, it is essential to understand the nature of the transaction, the source of the funds and your status as a beneficiary of the foreign trust. Here are some questions to consider when evaluating your assessable income:
- Are you a beneficiary of the foreign trust?
- Where did the trust get the money or assets?
- Why was the money or asset given to you?
- Was it for services, a gift, a distribution or a loan?
For further guidance on these steps and to ensure effective and efficient management of receiving payments or assets from foreign trusts, contact your Simmons Livingstone advisor on 1800 618 800 or via email at admin@simmonslivingstone.com.au.