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The Modernisation of Trust Administration Systems (MTAS) project, as an eagerly anticipated measure first mentioned in the March 2022 Budget, changes are set to come into effect on 1 July 2024. The Australian Taxation Office (ATO) recently unveiled a guide (Modernising trust administration systems), dated 12 April 2024, outlining forthcoming alterations to the annual tax return forms for trust income reporting, scheduled to take effect from 1 July 2024. In this article, we'll delve into the key aspects of these changes and explore the implications they hold for trustees, beneficiaries, and tax agents alike.
Changes to annual tax return forms
According to the ATO, these changes will affect trust tax returns for the income year 2023-2024 and beyond, including:
For trust tax returns, adding 4 capital gains tax (CGT) labels into the trust tax return statement of distribution
Introducing a new schedule (Trust Income Schedule) requiring all types of trust beneficiaries receiving trust income to be listed in the tax return forms
Adding new data validation to trust tax return forms for practitioner lodgements to enhance the integrity of reported data.
Who will be affected by these changes?
Trustees
Starting from 1 July 2024, there will be changes to the labels in the distribution section of the trust tax return form. Four Capital Gains Tax (CGT) labels will be added to the distribution statement in the trust tax return form. These changes will enhance trustees' ability to properly inform beneficiaries of their income entitlements and support the calculation of their CGT amounts in the tax return form.
Beneficiaries
This change will impact the income tax return forms for the 2023-24 income year. Pay attention to the Trust Income Schedule, which is a new form submitted alongside the income tax return form. The Trust Income Schedule replicates the fields from the distribution statement, requiring only the information to be copied.
If beneficiaries receive trust income distributions from managed funds, this should also be included in the new Trust Income Schedule. The Trust Income Schedule instructions will demonstrate how information provided on tax statements from managed funds is reported on the Trust Income Schedule.
Wis Australia, as a professional tax agent, understands the significance of this change for our clients. Therefore, we are committed to actively addressing this form update. If any information is required from clients, we will promptly reach out to you. We also aim to ensure our clients are promptly informed of this update to prepare for potential future changes. For further developments regarding the Modernisation of Trust Administration Systems (MTAS) project, please stay tuned for our updates.
Source: Modernising trust administration systems, ATO website, 12 April 2024, accessed 16 April 2024.