Income tax 2016

Recording entitlement rule in trust streaming provisions allows for creation of mismatches

Source: The Tax Specialist Journal Article

Published Date: 1 Apr 2016


The principle that the beneficial owner of an economic gain representing assessable income is the (proper) taxpayer is a well-established income tax principle, as is the correlative principle that those who do not benefit economically should not become the proper taxpayer. The recording entitlement rules within the Income Tax Assessment Act 1936 (Cth) concerning the allocation and streaming of a trust's net capital gains and attributes associated with franked distributions to beneficiaries provide for outcomes that depart from these principles. This anomaly, or tax planning opportunity, centres on a deficiency in the streaming mechanisms.

This article highlights the opportunities and risks to taxpayers arising from making use of the anomalous rule. Whether there is an anomaly will depend on the trust law rules that facilitate the creation of beneficiary entitlements. The article will also make brief reference to trust law rules and explain their significance to the central issue in the article.

Sorry, this is subscriber only content.

To gain access to this material and much more - Subscribe Now.

(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).

Already a Subscriber? Login now

Already a Subscriber? Login now


The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))


The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

Copyright Statement

All materials provided on this site are protected by copyright and are owned by or licensed to TTI.

Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.


Income tax 2016

Share this page