Yes, the Australian Taxation Office (ATO) is currently cracking down on the use of family trusts, particularly targeting income splitting by professionals to lower tax, artificial arrangements, and distributions to beneficiaries who do not actually receive the money. Enhanced scrutiny focuses on "reimbursement agreements" (Section 100A) and personal services income (PSI) being diverted through trusts.
The crackdown has resulted in the ATO undertaking extensive audits of family trusts and historical distributions, and the issue of hefty Family Trust Distributions Tax (FTD Tax) assessments for noncompliance – being a 47% tax (plus Medicare levy) along with General Interest Charges (GIC) on any historical liabilities.
You can transfer assets to the trust while getting an annuity payment. If the assets in the trust appreciate enough, you can pass that excess value to your heirs with little or no tax. GRATs are a popular wealth transfer strategy with ultra-wealthy Americans.
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The "5 by 5 rule" (or "5 and 5 power") in trusts allows a beneficiary to withdraw the greater of $5,000 or 5% of the trust's annual fair market value, whichever is higher, without triggering significant tax consequences, offering flexibility while preserving the trust's long-term integrity for the grantor's original purpose. If unused, the right lapses, but repeated lapses can have tax implications, so it's a strategic clause for asset management and tax planning.
Suze Orman, the popular financial guru, goes so far as to say that “everyone” needs a revocable living trust. But what everyone really needs is some good advice. Living trusts can be useful in limited circumstances, but most of us should sit down with an independent planner to decide whether a living trust is suitable.
New rules mean that many trusts will need to register with HMRC for international tax information exchange purposes by 31 December 2025, even if they have no beneficiaries or trustees with international tax liabilities. We highlight the new requirements, key deadlines, and penalties for non-compliance.
Account Takeover (ATO) is an attack whereby cybercriminals take ownership of online accounts using stolen passwords and usernames. Cybercriminals generally purchase a list of credentials via the dark web – typically gained from social engineering, data breaches and phishing attacks.
Putting your house in trust doesn't protect assets outside of the trust from probate. So if you want to avoid probate completely, you may want to move your other assets into the trust as well.
If you die within 7 years of making a transfer into a trust your estate will have to pay Inheritance Tax at the full amount of 40%. This is instead of the reduced amount of 20% which is payable when the payment is made during your lifetime.
Making a will to distribute your assets
Whether leaving assets to a spouse or civil partner, distributing assets to take advantage of tax-free allowances, or making gifts to charity, a valid will could help you to reduce or avoid Inheritance Tax altogether.
Bare trusts
Transfers into a bare trust may also be exempt from Inheritance Tax, as long as the person making the transfer survives for 7 years after making the transfer.
Making incorrect or fraudulent claims can alert the ATO, which can lead to an audit. To protect yourself from unnecessary fines and charges, you should always fulfil your obligations and submit accurate information whenever filing your taxes.
The Australian tax office is using AI to track even the smallest income transactions, with Aussies warned they'll be caught for under-reporting even $50, as the tax return deadline looms. The ATO statistics reveal there are 91 millionaires who are not paying their tax properly.
ATO occurs when fraudsters illegitimately access accounts using compromised credentials. Common methods of ATO attacks include credential stuffing, malware, SIM swapping, and more. Several avenues for preventing ATO attempts are available, including behavioral biometrics, malware detection, and device fingerprinting.
Residence trusts remove the value of the home from your estate, allowing you to avoid estate taxes on that asset. This strategy is typically most useful to people who own high-value homes that would put them over the federal estate tax exemption limits.
Under Internal Revenue Code Section 2035(d) — the so-called three year rule, if an insured person transfers an insurance policy to an irrevocable life insurance trust, even though the insured may no longer retain any incidents of ownership, if he dies within the three year period following the transfer, the entire ...
The remainder donated to charity must be at least 10% of the initial net fair market value of all property placed in the trust.