Additional tax liabilities may arise when money or assets of a foreign trust are paid to an Australian resident taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust. These can include:

• loans to them by the trustee directly or indirectly through another entity;
• amounts paid by the trustee to a third party on their behalf;
• amounts that are described as gifts from family members, but are sourced from the trust; and
• distributions paid to them or trust assets (such as shares) transferred to them by the trustee.

Taxpayers who receive money from a foreign trust may need to ask further questions to determine whether the amount must be included in their assessable income, including:

• whether they are a beneficiary of the foreign trust;
• where the foreign trust obtained the money; and
• why the money was paid to them, e.g., is it a payment for services, a gift, a distribution or a loan. 

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Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.