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22 Jul 11 On streaming

MEMBER 124 writes:

"In TAXVINE No 27 (15 July 2011) there is a TAXVINE comment under the report on the AAT case re streaming - which says 'Did we need special legislation to permit streaming?'

The Tax Institute - and other professional bodies and commentators – should STOP saying that the new legislation was there to 'permit streaming'. The legislation does not 'permit' streaming. Rather, what it does is apply special tax rules to beneficiaries who have received trust distributions that include amounts of franked dividends or capital gains. In fact the whole premise of the legislation - and which is stated in the EM - is that the trust deed has allowed the trustee to allocate and has so allocated. That is, it is a matter of trust law that streaming can be effective - it is not something that is either 'permitted' or not. The question is - and always has been - does your deed allow it and what is the effect of it.

That is, unless and until the income is 'streamed', you do not get into this new legislation.

But IF the deed allows you to stream and IF the trustee has streamed - the legislation acts to add franking credits, and grosses up discounts etc, to the beneficiary's taxable income. This legislation was needed to ensure that IF there is streaming of particular types of income, the special features of these two types of income which require adjustments to taxable income - on top of the mere fact that the income can retain its character - can apply to the beneficiary.

The legislation is NOT saying you cannot stream other sorts of income either. In fact, the whole basis of the legislation is that trusts can stream income."


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