18 Oct 06 Amendments to the CGT treatment of testamentary trustsIn a press release issued on 17 October 2006, the Minister for Revenue and Assistant Treasurer, Peter Dutton, announced that the Government will amend the income tax legislation that applies to certain trusts created under a will (testamentary trusts). The amendments will improve the taxation treatment of income beneficiaries in testamentary trusts, such as life tenants.
The amendments will allow the trustee of a testamentary trust to choose to be assessed on some part or all of an amount of net capital gain that is included in the net income of the trust where:
- that part or all of the net capital gain would be assessed to a presently entitled income beneficiary of the trust; and
- that beneficiary is not entitled under the terms of the trust to benefit from the gain.
The Minister said that these amendments will ensure that an income beneficiary is not assessed in respect of trust capital gains from which they will not benefit. Legislation giving effect to this announcement will be introduced as soon as practicable, following consultation with industry on the design and the implementation of the amendments. The amendments will apply to the 2005-06 and later income years.
For a copy of the Minister's press release, No 2006/74, 17 October 2006, go here