The ATO is focusing this year on beneficiary tax file number (TFN) reporting for closely held trusts and family trusts.

If you are a trustee of a closely held trust you’ll now have additional reporting obligations beyond the lodgement of the trust tax return each year. This assists the ATO in tracking where the distributions go and whether the beneficiary has declared the income.

Who do the Rules Apply to?

TFN withholding rules apply to most beneficiaries of closely held trusts, including an individual, partnership, company, self-managed super fund, super fund or trust. There are some exclusions, so check with us to clarify this.

A beneficiary does not have to provide a TFN if they choose not to, however, the trust making payment (or unpaid entitlement) must then withhold the top rate of tax from any payments and unpaid entitlements.

If You Pay Beneficiaries

  • Make sure you have TFNs for all beneficiaries.
  • If no TFN is provided, check with the beneficiary before making payment that they understand tax will be withheld at the top rate, currently 47%.
  • For new beneficiaries who have provided a TFN, lodge a TFN report quarterly.
  • Lodge activity statements and pay PAYGW obligations to the ATO.
  • Issue payment summaries within 14 days of lodging the Annual TFN Withholding report, due on 30 September for most trustees, therefore payment summaries will generally be due by 14 October.

Annual Reporting

Now that there are new rules for PAYG withheld deductibility, it is important that trustees understand the TFN and reporting rules. We’ll make sure you are reporting correctly and able to claim PAYGW tax deductions.

If you have any questions about your trust we are happy to help.