Taxation

Deemed to be a “fixed trust” – draft guidelines

Deemed to be a “fixed trust” – draft guidelines

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).

Real life examples of problematic variation clauses

Real life examples of problematic variation clauses

There are a number of reasons why the trust instrument of a discretionary trust might need to be amended. These include, but are not limited to, succession planning, tax planning and/or the general modernisation of the provisions of a trust deed to account for changes in trust and tax laws.

Foreign trusts and foreigner duty surcharge

Foreign trusts and foreigner duty surcharge

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). 

CGT issues when creating and dealing with UPEs

CGT issues when creating and dealing with UPEs

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

CGT Hotspots in Restructuring Trusts in Estate Planning

CGT Hotspots in Restructuring Trusts in Estate Planning

There are significant tax issues, especially in relation to possible capital gains tax (CGT) liabilities, which should be considered whenever a client intends to restructure a trust.  This is particularly the case in the restructuring of entities, particularly trusts, in a family group