Trust Reporting Changes From 1 July 2024 Under MTAS
Changes to simplify reporting for trustees and beneficiaries will commence from 1 July 2024 as part of the Modernisation of Trust Administration Systems (MTAS) project. These changes are designed to improve transparency, consistency and accuracy in trust income reporting.
From this date, updates will be made to the trust tax return, including modifications to labels in the statement of distribution, the introduction of a new schedule for all trust beneficiary types, and the implementation of additional data validations.
Changes to the Trust Statement of Distribution
From the 2023–24 income year onwards, four new capital gains tax (CGT) labels have been added to the statement of distribution within the trust tax return.
Purpose of the New CGT Labels
These new labels are intended to:
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Improve how trustees notify beneficiaries of their income entitlements
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Support more accurate calculation of CGT amounts in beneficiaries’ tax returns
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Reduce inconsistencies between trust and beneficiary reporting
These changes enhance alignment between trust reporting and individual tax return disclosures.
New Trust Income Schedule for Beneficiaries
A new trust income schedule has been introduced for all trust beneficiary types.
What Beneficiaries Need to Do
The ATO recommends that all beneficiaries obtain a copy of the trust statement of distribution relevant to their entitlements. This information is required to correctly complete the new trust income schedule.
The trust income schedule instructions explain how details from the trust statement of distribution should be reported. This includes trust income derived from managed funds.
It is important to note that the new trust income schedule does not replace existing trust income labels in beneficiary tax returns. Beneficiaries must still complete all relevant existing trust income labels in addition to the new schedule.
MyTax Lodgers
Individual beneficiaries who lodge their tax returns via MyTax will receive prompts to complete the additional trust income reporting requirements.
ATO Reminder on Changes to Trust Resolutions
The ATO has reminded trustees of their obligations where beneficiaries’ entitlements reflected in trust resolutions are later changed.
When the ATO Must Be Notified
If a trust resolution is subsequently argued to be invalid, defective or made at a different time, and this change triggers tax consequences, the ATO must be notified as an affected party.
Key Resolution Timing Requirements
For discretionary trusts:
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Resolutions to distribute trust income must generally be made by 30 June of the relevant income year
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Resolutions to confer specific entitlement to capital gains must be made by 31 August following the income year in which the capital gain is made
Failure to comply with these timing requirements can impact beneficiaries’ present entitlement and tax outcomes.
High-Risk Trustee Behaviours Identified by the ATO
The ATO has outlined several high-risk behaviours that may attract scrutiny, including:
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Altering trust resolutions after tax returns have been lodged
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Failing to notify the ATO of errors in trust deeds or trust administration
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Making decisions that affect trust tax liabilities, such as early vesting, without informing the ATO
These behaviours can lead to disputes over beneficiary entitlements, amended tax assessments and, in serious cases, allegations of tax fraud or evasion.
Importance of Open Communication With the ATO
The ATO emphasises that trustees must maintain open and honest communication regarding trust administration issues. Failure to do so can result in serious consequences, including:
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Amended tax assessments for fraud or evasion, which are not subject to the standard four-year review period
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Significant administrative penalties
Trustees are strongly encouraged to promptly advise the ATO of any mistakes in trust deeds or administration to minimise legal, tax and financial risks.
Key Takeaway for Trustees and Beneficiaries
The MTAS changes represent a significant shift in trust reporting requirements. Trustees and beneficiaries must ensure they understand and correctly apply the new reporting obligations from 1 July 2024. Careful record-keeping, timely resolutions and transparent engagement with the ATO are essential to avoid compliance issues and unintended tax consequences.
Speak to one of our accountants if you have any questions about the changes in tax for 2024.
