Providing Certainty for Trusts

Source: Month 03-2011-81 ~ 1-1 – Providing Certainty for Trusts (Shorten), Media Release No. 040, 4 March 2011

In his speech to the 26th annual Taxation Institute of Australia's National Convention, Assistant Treasurer Bill Shorten announced the Government will adopt two recommendations to clarify the tax law for over 600,000 trusts in Australia.

The Government has released a discussion paper for public consultation about two recommendations from the Board of Taxation that addresses two key areas of uncertainty for trusts:

• Better align the concept of 'income of the trust estate' with 'net income of the trust estate'
• Enable the streaming of capital gains and franked distributions.

The changes will apply for the 2010-11 and later income years.

The Government is aware that these interim changes will not resolve all of the issues with the current operation of the trust income tax provisions as highlighted by the High Court's decision in Commissioner of Taxation v Bamford. However, the Government understands there is urgent need for certainty on the key issues recommended by the Board.

Following this, a further round of public consultation on exposure draft legislation and associated explanatory materials will be released as soon as possible. It is expected that legislation will be introduced into the winter sittings of Parliament.

Editor: A submission was lodged with Treasury addressing certain aspects of the proposal. That submission can be downloaded below. Our submission focused on the impact on accounting practices of aspects of the proposal.

Tax Matrix Submission to Treasury