Trust distribution minutes

In the recent case of The Trustee for Goldenville Family Trust A/C Xiangming Huang v Commissioner of Taxation, two beneficiaries of a property development family trust were unsuccessful in claiming millions of dollars in interest income distributions were subject to lower withholding tax rates.

The Deputy President of the Administrative Review Tribunal (ART), found that:

• the trust distribution minutes were prepared after year-end;

• there was no evidence of director meetings to formalise the distributions; and

• as a result, the resolutions were deemed invalid.

This case highlights critical issues for advisors.  A written resolution alone is not enough.  It must be supported by clear evidence of when the decision was made.  If a resolution appears inconsistent with surrounding facts, it also risks being ruled invalid.