ClearLaw Articles - Trusts

Trust resettlements and TD 2012/21: some comfort but uncertainties remain

Thu, 31 Jan 2013 01:00:00 GMT

The judgment in FCT v Clark and Anor^[1] and subsequent withdrawal of the Commissioner's Statement of Principles on 20 April 2012, created uncertainty on the ATO's view on resettlement of trusts. On 24 October 2012, the Commissioner released Taxation Determination TD 2012/21 confirming his position in relation to CGT events E1 and E2 and the creation of a trust over CGT assets. Some changes have been made from the previously released draft TD 2012/D4 in finalising this TD.

Trust reform start date deferred; fixed trust discussion paper released

Lisa Lynch, Thomson Reuters — Wed, 29 Aug 2012 00:48:56 GMT

This article discusses:

deferral of the proposed start date for the broader reform of trust income taxation and the new tax system for managed investment trusts to 1 July 2014; and
the issue of a discussion paper seeking views on "a more workable approach for fixed trusts" for the purposes of taxation of trust income.

Div 7A benchmark interest rate for 2012-13: Taxation Determination TD 2012/15

Jane Tu, Thomson Reuters — Mon, 30 Jul 2012 14:00:00 GMT

On 27 June 2012, the Commissioner of Taxation released Taxation Determination TD 2012/15 "Income tax: what is the benchmark interest rate applicable for the year of income that commenced on 1 July 2012 for the purposes of Division 7A of Part III of the Income Tax Assessment Act 1936 and how is it used?"

2011-12 trust changes: interview with ATO senior tax counsel

Jane Tu, Thomson Reuters — Thu, 28 Jun 2012 14:00:00 GMT

In a recent interview, an ATO senior counsel outlined the ATO view on trusts and the changes implemented by the ATO for the 2012 income tax year. Some points of note from the interview are outlined below.

New South Wales Land Tax - Chief Commissioner of State Revenue v Sayden Pty Ltd as trustee for the Griffin Property Unit Trust (RD)

Paul Ellis — Thu, 28 Jun 2012 14:00:00 GMT

A recent decision of the New South Wales Administrative Decisions Tribunal (ADT) highlights:

that trust deeds containing unclear and conflicting clauses can be a risk to trustees and beneficiaries; and
that the NSW Office of State Revenue's strict interpretation of the requirements of section 3A(3B) of the Land Tax Management Act 1956 (NSW) (LTMA) remains a risk to trustees and unit holders who establish fixed unit trusts to hold land.

Transfers by trustee companies. ASIC’s requirements set out in Consultation Paper

Terry Hayes, Thomson Reuters — Fri, 30 Mar 2012 01:00:00 GMT

On 24 January 2012, the Australian Securities and Investments Commission (ASIC) released Consultation Paper 173 "Trustee companies: Transfer determinations by ASIC" (CP 173).

CP173 seeks public comment about the Commission’s power to administer the transfer determination provisions of the Corporations Act 2001 for trustee companies providing traditional trustee company services.

Trusts valid or not? Settled sums, record keeping

Hadi Mazloum — Tue, 28 Feb 2012 23:33:00 GMT

A recent case reminds us of the importance of the settled sum and proper trust records in ensuring the validity of a trust. The Victorian Civil and Administrative Tribunal (Tribunal) recently denied tax benefits that would otherwise be available to trusts by finding that the trusts did not in fact exist because the settled sum had not been paid and the documents had not been executed. The case is Aston (Aust) Property Pty Ltd v Commissioner of State Revenue (Taxation)[1].

'Resettlement' and continuity of 'trust estate' — update on the ATO's view after Commissioner of Taxation v Clark

Viviane Karoumbalis — Tue, 31 Jan 2012 03:08:16 GMT

The Australian Taxation Office (ATO) has confirmed that a change in trust circumstances, including a change in membership and trust property, does not necessarily create a new 'trust estate' or cause a 'resettlement' of the trust. Effectively, the proposition established in the High Court decision of FCT v Commercial Nominees Australia has been broadened to apply to unit trusts.

This article includes a link to a previous ClearLaw article that discusses Clark's case.

Certainty for streaming of capital gains and franked distributions: interim changes after Bamford's case

Alastair Keith, Maddocks Lawyers — Thu, 27 Oct 2011 04:50:38 GMT

Although the High Court's decision in Bamford's case¹ resolved some long-debated issues about the taxation of trusts, it also highlighted the need for these issues to be dealt with.

As part of the federal government's response to Bamford's case, it has implemented interim changes to income tax legislation — via the Tax Laws Amendment (2011 Measures No 5) Act 2001 (Cth) (Bamford Amendment Act) — to:

enable the 'streaming' of capital gains and franked distributions; and
introduce anti-avoidance rules targeted at inappropriate trust distributions for exempt entities.

This article has links to summaries of Bamford's case and reviews the interim legislative changes.

New law to clarify uncertainty on streaming of capital gains and franked distributions — Tax Laws Amendment (2011 Measures No.5) Bill 2011

Andrew Wright — Thu, 30 Jun 2011 03:50:16 GMT

A new bill dealing with discretionary trusts in response to Bamford's case:

seeks to provide certainty in relation to streaming of capital gains and franked distributions (including any attached franking credits); and
introduces an anti-avoidance measure for distributions to exempt entities.

These amendments have received Royal Assent and will apply from the 2010-11 income year. However, for the 2010-11 income year, the Commissioner will, as an administrative arrangement, accept a recording of distributions of franked distributions made by 31 August.

We outline below practical considerations that need to be considered by trustees looking to stream such amounts to particular beneficiaries. The ATO has given trustees until 31 August 2011 to make the necessary records.

The Cleardocs Discretionary Trust deed contains the necessary powers to allow trustees to stream capital gains, or franked distributions, to particular beneficiaries in the way clarified in the new law.