Client: My client had properties in his name and also in a trust. He passed away and left these properties to his three children according to his will. For tax and business reporting purposes, we've set up an estate for the properties he owned personally and a family trust for the ones in the trust. We've already submitted tax returns and BASs for the estate and trust up to September 30, 2016. But now, the children have moved all the properties into their own names as per the will. Here are my questions:
Do we still need to file tax returns and BASs for the estate and family trust? Will the children need to file BASs for the rental properties they now own individually? If yes, can we register a partnership for GST filing?
Advisor: Based on what you've told me, now that all properties are in the children's names, here's what you should do:
You should still file income tax returns and BASs for the estate and trust up until the date the properties were transferred. These should show the income and expenses up to that point for each. If the properties are now jointly owned or owned as tenants in common, then legally there's a partnership for tax and GST purposes. So, the children can register as a partnership for ABN/GST. The tax office doesn't need a separate partnership tax return if individuals own properties together. Each person just needs to declare their share of the income and expenses on their personal tax return's rental schedule. Also, when the properties transferred from the trust trigger a CGT event, the trust might face capital gains tax depending on their market value compared to their original cost. The transfer is considered as the trust selling the properties and the individuals buying them at market value.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
