One of the most significant consequences of the transfer balance cap is the effect it has on the payment of death benefits.
During a panel discussion at The Tax Institute‘s National Convention in March 2016, Second Commissioner Andrew Mills mentioned that the ATO was considering publishing guidance regarding the manner in which the Commissioner would exercise his discretion to treat beneficiaries as having fixed entitlements in trusts for the purpose of s 272-5(3) of Sch 2F to the Income Tax Assessment Act 1936 (Cth) (ITAA36).
From 1 July 2015, if the trustee of a foreign trust acquires Victorian residential property, that trustee is liable for a duty surcharge of 3%1 on top of the normal ad valorem duty. This can result in a duty rate of up to 8.5%. This article will examine when a trust will be a foreign trust and what changes can be made to trusts to ensure that they are not foreign trusts under the Duties Act 2000 (Vic).
Until recently, unpaid present entitlements (UPEs) have been a rarely considered aspect of trusts, especially in relation to tax considerations post their creation. However, in the last few years, the position of the Australian Taxation Office (ATO) on the application of Div 7A of the Income Tax Assessment Act 1936 (Cth) (ITAA36) to UPEs to corporate beneficiaries1 has brought UPEs into focus. In more recent times, the ATO has released draft determinations, a determination and a ruling on the interaction of UPEs with a number of tax provisions, including the bad debt rules and the small business tax concessions.2