Receiving payments or assets from foreign trusts

Additional tax liabilities may arise when money or assets of a foreign trust are paid to a taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust.  These can include:

  • loans to them by the trustee directly or indirectly through another entity;
  • amounts paid by the trustee to a third party on their behalf;
  • amounts that are described as gifts from family members, but are sourced from the trust; and
  • distributions paid to them or trust assets (such as shares) transferred to them by the trustee.

Taxpayers who receive money from a foreign trust  may need to ask further questions to determine whether the amount must be included in their assessable income, including:

  • whether they are a beneficiary of the foreign trust;
  • where the foreign trust obtained the money; and
  • why the money was paid to them, e.g., is it a payment for services, a gift, a distribution or a loan.

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Warren Kruger

Specialist Tax Consultant - “Helping YOU Pay The Correct Tax And Not A Penny More”. My story starts on Christmas Eve, back in 1983 in South Africa.

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