Trusts, income tax, CGT and foreign residents

A Matter of Trusts

Taxation in Australia Journal

This article provides a “whistle-stop tour” of the key (but not all) trust taxation rules for Australian resident trusts with foreign beneficiaries.

The rules for the taxation of trusts are complex and in need of reform. A point that has been made many times since Hill J observed in Davis v FCT that “the scheme of Division 6 calls out for legislative clarification, especially since the insertion into the Act of provisions taxing capital gains as assessable income”.

Coupled with the complexities Hill J referred to is how the trust taxation rules apply when there are foreign beneficiaries and/or foreign income. The deregulation of financial markets and exchange controls since the 1980s, online transactions, and the increased global mobility of individuals mean that consideration of the international aspects of trust taxation will, in many instances, be “the new black” for trustees.

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