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06 Jun 11 Improving the taxation of trust income

Pending the enactment of the Tax Laws Amendment (2011 Measures No 5) Bill 2011, which was introduced into Parliament on 2 June 2011 - see 2011 TAXVINE No 21 (3 June 2011) - the ATO has released details of its proposed administrative treatment of the amendments relating to the taxation of trust income contained in that Bill.

The Bill will amend Subdivision 115-C and Subdivision 207-B of the ITAA 1997 to ensure that, where permitted by the trust deed, the capital gains and franked distributions (including any attached franking credits) of a trust can be effectively streamed for tax purposes to beneficiaries by making them “specifically entitled” to those amounts. The Bill will also amend Division 6 of Part III of the ITAA 1936 to include specific anti-avoidance rules to address the potential opportunities for tax manipulation that can result from the inappropriate use of exempt entities as beneficiaries. This measure applies for the 2010-2011 income year and later income years. It is not, however, certain that the Bill will be enacted before 30 June 2011.

For details of the ATO’s proposed treatment of lodgments pending the enactment of these amendments go here

- see 2011 TAXVINE No 18 (13 May 2011) -