Published on 14 Nov 97
by THE TAX INSTITUTE
1. It is submitted that:-
a) The core definition of "fixed trust" should be rendered certain. In particular, unit trusts should not be excluded by powers to allot, redeem, accumulate and vary. Additionally, the definition of "fixed entitlement" should not impose a requirement that there be an instrument.
b) The rigidity of the 50% stake test needs to be addressed. The test ultimately adopted needs to determine whether there has, in substance, been a change of ownership and should not be triggered in cases where little or no change has, in fact, occurred.
c) The legislation needs to properly accommodate a range of unit trusts which have discretionary sub-trusts which cannot become (or will not elect to become) family trusts and a range of trusts from which benefits flow to 2 or more families as defined.
TAX POLICY & RESEARCH DIVISION