Trust deed amendments

Dear Fellow Practitioner,

The most likely reason to have a deed amended is to enable streaming.

Despite alarming messages from deed vendors few trust deeds will require amendment before 30 June 2011.

A trust can only benefit its beneficiaries by streaming if it has capital gains and or franked dividends that could be streamed. In the absence of capital gains and or franked dividends no case can be made for an amendment to provide for streaming.

Even if a trust has capital gains or franked dividends streaming will not provide any benefit unless a beneficiary, or beneficiaries, have exploitable and differentiated tax characteristics, such as having capital losses or differentiated marginal rates or being a non resident.

Where distributions are made from a service trust to a single person streaming is of no value. Similarly where a trust makes distributions to two people with identical tax characteristics, such as two spouses, streaming is of no value.

If a trust already has a streaming provision it is unlikely to be improved by a general amendment that provides for streaming.

Finally it is the trustee’s choice as to whether or not to amend, not the practitioner’s choice.

We hope this summary is of assistance to you.

Regards Tax Matrix Pty Ltd - A registered tax agent celebrating our 10th year providing in house tax education for thinking tax professionals

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