A LinkedIn post that has been widely viewed by our audience was in regards to the Medicare levy. It explained that on occasions the ATO has contacted our firm to ask whether a ‘trust’ is still a deceased estate or has moved on to testamentary trust stage.
The ATO’s interest lies in the application of the Medicare levy. The Medicare levy is an amount payable on taxable income in addition to income tax. Currently, the rate of the Medicare levy is 2% of taxable income.
The levy applies to both individuals and trustees, except the trustee of the estate of a deceased person. So, whilst a legal personal representative is not required to pay the Medicare levy, the trustee of a testamentary trust (whether assessed under section 99 or 99A of the ITAA 1936) is not exempt.
It is therefore very important to make sure that the trust income tax return is correctly categorised and that a new tax file number has been obtained for the testamentary trust.
Feel free to contact our team should you want to discuss this topic further and potentially have clients who may be in this situation.
This publication is not intended to be and should not be used as a substitute for taking taxation advice in any specific situation. The information in this publication may be subject to change as taxation, superannuation and related laws and practices alter frequently and without warning. Neither BNR Partners Pty Ltd, our employees or agents are responsible for any errors or omissions or any actions taken or not taken on the basis of this publication.