Why Form 3520 Partnerships 2023-2024

Good morning, my name is Fletch Hyneman. I'm a partner at Cooper Great Sward, specializing in tax and tax disputes. Whether you have to pay tax on a distribution from a foreign trust depends on a number of different factors. The first one to consider is your own residency position. So, the general position is that if you are an Australian tax resident, you'll pay tax on amounts of income that are distributed from the foreign trust to you. The other thing to watch for is that if you're an Australian tax resident, you may also need to include distributions of capital from a foreign trust in your assessable income. There are different rules if you're a non-resident or a temporary resident. What you need to know about section 9 is that, unlike most provisions in the income tax legislation that tax income, section 99B actually taxes a capital amount. So, if a foreign trust distributes an amount of capital to you, which is typically the funds of the trust, for example, that have accumulated over many years, then actually that amount can be included in your assessable income. There are some exclusions to this, however. The main exclusions relate to the amounts of the original corpus of the trust. So, for example, if the foreign trust was set up in say, 1980, with a hundred thousand dollars as the original corpus of that trust when it was established, then if there is then a capital distribution to you in Australia, you have to reduce the amount that's included in your assessable income by that corpus amount. Sometimes, if the trust has existed for many years, the corpus amount will be quite small compared to the rest of the trust. However, if the trust is quite recent, sometimes the corpus...