24 Jun 1111 Preamble - 24 June 2011
Amongst the censor motions, plebiscite proposals and tales of political upheavals of a year ago, an important piece of tax legislation passed the Parliament yesterday. Tax Laws Amendment (2011 Measures No. 5) Bill 2011, containing (amongst other things) the trust streaming measures, was passed by the Senate yesterday evening (Thursday 23 June). This is welcome news, because the Bill will receive the Royal Assent in the next couple of days such that we will have finalised legislation by 30 June.
Members who have perused the Bill will appreciate that it contains crucial measures for over 600,000 trusts. The Tax Institute welcomes the relative certainty that the Bill brings – we now know that, notwithstanding the views expressed in Bamford, streaming of capital gains and franked distributions will be possible for the 2011 income year. Trustees should undertake some actions prior to 30 June, including the review of the trust deed to ensure that it actually permits streaming. Whilst many modern trust deeds permit streaming, it is worth double-checking and considering whether amendments to the deed are required. Trustees that intend to stream franked amounts must ensure that beneficiaries’ specific entitlements are recorded in the accounts or records of the trust no later than 30 June. This requirement, together with the requirements about specific entitlements for capital gains, both require very careful consideration by trustees.
Although we have certainty on the overall policy of streaming, uncertainties in the actual interpretation and application of the new law may be encountered in practice. As members who have attended our CPD face-to-face or live stream sessions will appreciate, the new provisions are complex and require careful consideration to ensure that the intended tax position for beneficiaries is in fact achieved. We will be closely monitoring our members’ experiences with the new provisions, and will raise any apparent unintended consequences with Treasury and the Assistant Treasurer.
I highly recommend the paper by Vice-President Ken Schurgott FTIA as an excellent resource for guiding your way through the new provisions, in addition to The Tax Institute's other publications and education products that have been compiled over the last couple of weeks. You will find all of the details on our website or feel free to contribute to our blog.
Please see below for details of other activities this week
Robert Jeremenko FTIA