Taxation of trusts - Discussion paper released

The Federal Government has announced a review of the taxation of trusts with a view to reform.  A consultation process is now underway and submissions are required by 10 February 2012

The recent High Court decision in the Bamford Case has been the catalyst for much discussion within legal and accounting circles on the consequences for trusts.  As we reported previously, it has also prompted the Federal Government to undertake a review of the taxation treatment of trusts.

The consultation paper released on 21 November 2011 has identified significant areas requiring reform and modernisation.

The target date for the introduction of any reforms flowing out of this process is set for 1 July 2013.
Some of the issues identified in the paper include:

• The characterisation of income and capital within trusts
• Streaming
• Beneficiaries share of income
• Extending the time for determining entitlements
• Allocation and treatment of expenses of trusts

Options for reform have been outlined, but they do not include taxing trusts as companies.  The government says that would be a major departure from the current policy framework.

We will continue to monitor and report on developments in this area.  Should you require any further information please contact us.

Donovan Oates Hannaford, Lawyers is ready to assist.

Please contact Hadyn Oriti should you require any further information.
Hadyn Oriti
November 2011
P: +61 2 6583 0449
E: horiti@dohlaw.com.au