International Family Business Blog

Tax issues for trustees of Australian trusts with Israeli beneficiaries

Many Australians of Jewish descent will have established family trusts. It is likely that in some cases beneficiaries of those trusts will now be living in Israel.

In 2013 the Knesset brought in a new law that changed the rules for the taxation of income entitlements of Israeli resident beneficiaries of foreign trusts. Tax is now due whether or not those entitlements were paid, retained in the trust, or satisfied “in kind”.

The changes to the law apply as from 1 January 2014 and trustees of such trusts have reporting obligations to the Israel Tax Authority. 

The rules are somewhat complex, but this plain language article by Chaim Wigoda provides a useful guide -

Australian tax evaders last chance to ‘fess-up'

The Australian Tax Office’s (ATO) Project Do It! offshore income disclosure amnesty ends at the close-of-business (Australian DST) on Friday 19 December!

Australian residents, whether individuals or entities, need to act urgently if they are to avoid heavy penalties and likely criminal prosecution. Once the amnesty period ends, the ATO will be utilising its extemely extensive information gathering powers to chase down and impose tax and heavy penalties on Australians who have hidden offshore income and assets.

Australian resident individuals and entities who are already under audit are unable to take advantage of the amnesty. 

Those Australian individuals and corporations who have undertaken “courageous” offshore planning should urgently seek independent second opinions on the veracity of their arrangements.

Even having had ‘big firm’ advice will provide no protection when the ATO inevitably comes calling.

In this context, the ATO is already closely examining the aggressive Liechtenstein plans put in place for Australian companies by several of the Big 4 accounting firms.

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