14 Discretionary Any XYZ Pty Ltd John alone Most family trusts are trust beneficiary acts as Mary alone discretionary trusts. or trustee for Annabel The defining combination the alone characteristic of a of Family Trust, Jack discretionary trust is beneficiaries. which carries David alone, that the trustee has on business or the unfettered power as Jones any to distribute income Painting combination and/or capital to any Services. The of any two, or none of the trust has three or four beneficiaries, in any been set up of the above proportion between as a five zero and 100%. As a discretionary individuals, consequence, any trust. The or beneficiary, or any beneficiaries all five of the combination of are John, above beneficiaries, as a Mary, individuals potential recipient of Annabel, together. 100% of the capital Jack and and income, is David Jones. deemed to have a controlling interest in the business carried on under the trust. 15 types of The person - The person Each trust deed will trusts or persons or persons be reviewed by TRO with an with an to determine the entitlement entitlement controlling interest to more than to more than provisions. Where a 50% of the 50% of the trust contains a income and income and provision that or capital of or capital of provides broad the trust. the trust powers to the trustee, the trust may be determined to be discretionary in nature, under which any beneficiary alone, or any combination of beneficiaries acting together, have a controlling interest (see reference 14 above).
14 Discretionary trust Any beneficiary or combination of beneficiaries. XYZ Pty Ltd acts as trustee for the Family Trust, which carries on business as Jones Painting Services. The trust has been set up as a discretionary trust. The beneficiaries are John, Mary, Annabel, Jack and David Jones. John alone Mary alone Annabel alone Jack David alone, or any combination of any two, three or four of the above five individuals, or all five of the above individuals together. Most family trusts are discretionary trusts. The defining characteristic of a discretionary trust is that the trustee has the unfettered power to distribute income and/or capital to any or none of the beneficiaries, in any proportion between zero and 100%. As a consequence, any beneficiary, or any combination of beneficiaries, as a potential recipient of 100% of the capital and income, is deemed to have a controlling interest in the business carried on under the trust. 15 types of trusts The person or persons with an entitlement to more than 50% of the income and or capital of the trust. - The person or persons with an entitlement to more than 50% of the income and or capital of the trust Each trust deed will be reviewed by TRO to determine the controlling interest provisions. Where a trust contains a provision that provides broad powers to the trustee, the trust may be determined to be discretionary in nature, under which any beneficiary alone, or any combination of beneficiaries acting together, have a controlling interest (see reference 14 above).
Payroll-tax-guide-I-PRT-001.docx