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Beneficiaries of trusts have 4-year amendment periods?

In a recent case, the AAT has held that a taxpayer who was a potential beneficiary of a discretionary trust, but who did not receive any distributions in a particular year, was nonetheless subject to a 4-year amendment period, rather than the regular 2-year amendment period that otherwise applies to individuals.

The upshot of that decision was that the taxpayer’s returns were able to be amended by the Tax Office within the 4 year period.

Note: This case obviously has huge ramifications for anyone (which could be everyone) who is a potential beneficiary of a discretionary trust, even if they do not receive any income from the trust (or even if they are unaware that they are beneficiaries of a trust).

We hope that this decision will be appealed, and reversed, or else a legislative solution may be necessary. We will keep clients updated on any changes.


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