Case Study - Trust Beneficiary moving to Australia

Background

A girl's mother dies when she is a teenager. Her late mother leaves assets in a trust for her to vest when she is 25. When the girl reaches 25, she wants to move to Australia and pursue her career and the better opportunities that exist over there.

Result

By moving to Australia, the now young woman becomes a foreign temporary migrant for Australian tax purposes. She will only be taxed on her Australian sourced income and her worldwide employment income meaning the trust in New Zealand, where she is effectively the settlor having transferred assets into the trust post her turning 25 and receiving them from her mother's estate, is not subject to the Australian tax regime.
This means that future distributions of income or capital to her in Australia would not be subject to income tax in Australia, even if those funds were taken into Australia.

Potential Future Issues

Notwithstanding this, we advised the young woman to make sure that she did keep in contact with us and advise us if she was likely to enter a relationship in the nature of marriage in Australia, be it de-facto or otherwise. The reason for this is if she does enter such a relationship with a person who is an Australian permanent resident or citizen for immigration purposes, she would lose her foreign temporary migrant status.

Summary

This later occurred and again through careful structuring we could provide a pathway that would see trust income and capital still able to be effectively distributed to her in Australia without Australian income tax.

Next Steps

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