RegulationMay 23 2013

How to...address trust tax liabilities

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ByA|imee Steen

Tax legislation has developed in bits and pieces; it is no wonder it is a frequent cause of confusion for trusts.

In this month’s tax spotlight, Danny Cox highlights that a tax liability in trust can arise on several occasions and on multiple parties.

“Tax legislation has developed over the years in a piecemeal way, particularly with regards to the thwarting of tax avoidance routes,” he says.

“As a result a tax liability in connection with a trust can arise on several different occasions, not just on settling the trust. Each of the parties to the trust – the settlor, the trustees and the beneficiaries – may be liable to tax.”

In this detailed guide, Mr Cox analyses the situation for:

• Trust income tax

• Discretionary trusts

• Absolute entitlements

• Life interest trusts

• Bare/absolute trusts

• Trust capital gains tax

He further looks at entitlement to income, impact of residency and standard exemptions. For the complete guide, read the full article here.