Four things your Accountant should do differently this EoFY

Thanks to COVID-19 it is not just the usual year-end issues such as bad debts, trading stock, losses, super and the $150k immediate capital expenditure (well the $150k is not that usual).

These are the four must-do things:

1. Family Trust distributions Minutes  – ‘ATO threatening to review every Minute’

Your Accountant prepares Family Trust Distribution Minutes before the end of each financial year. Often you may want to recycle them. This is not the year to do that. Let your Accountant provide you with our fully updated 2020 minutes. Do not rely on old ones you built on our website for previous financial years. Everything has changed.

The Trustee signs the Family Trust Distribution Minutes. This is before the end of the financial year. It declares how Family Trust income is distributed for the current financial year.

The minutes allow distributions to all the income categories. For example, you can stream income (such as net capital gains and franked distributions) to specific beneficiaries. Our minutes includes comprehensive notes. Our law firm letter signs off on the Minutes. You are protected by our law firm’s Professional Indemnity Insurance.

2. Clean up Family Trust deed – ‘Centrelink is running out of money’

Update the Family Trust Deed:

1. To comply with the ATO’s new interpretation of the old Bamford case. Especially in light of Thomas v FCT  [2017] FCAFC 57. (Will the ATO ever stop tinkering?)
2. Wind up old Family Trusts to deal with the new Centrelink attacks. But if you want to keep your Family Trust going change the Trustee and Appointor. Also, consider replacing a human trustee with a corporate trustee.

3. Company documents – ‘a new world where no one can hold hands’

Update your Company Constitution for ‘electronic meetings. Our Constitution provides maximum flexibility for meeting technology, directors’ quorum and chairmanship. Most Constitutions sadly have rigid requirements for directors to validly meet and sign documents. This is in the ATO’s sights.

1. Where directors cannot physically meet, our Constitution allows the location of the meeting to be chairperson’s location. Our Constitutions are permissive and adopt by reference the Corporations (Coronavirus Economic Response) Determination No 1 2020 dated 5 May 2020. Company minutes are signed by the chair where that person is physically located. Under our Constitution an electronic signature on the minute is acceptable.
2. Sole directors can’t prepare minutes. Instead, a sole director resolution is needed. Our Constitution allows this and also for it to be signed electronically.

4. Deeds required ‘wet signatures’

Deeds like Wills, POAs, Div 7A Loan Deeds, must be signed by a ‘wet signature’. In fact, all ‘Deeds’ must be signed by a ‘wet signature’. Electronic signatures do not work. Forget the weird and rushed changes to the law. Do not rely on electronic signatures.

Remember, we are the only Australian law firm providing legal documents online. Be careful of websites that ‘look like’ law firms but merely re-sell a law firm’s template.

Non-law firm websites do not protect you. They are not protected by Australian law firm professional indemnity insurance.