Trusts 2020

Trust asset revaluation strategies revisiting the practice

Source: Taxation In Australia Journal Article

Published Date: 1 Mar 2020


The seminal case of Fischer v Nemeske has accepted the effectiveness of asset revaluation reserves under trust law, reinvigorating the use of such reserves for the purposes of facilitating succession planning, asset protection and family exit objectives. This article explores the utility and mechanics of asset revaluation reserve strategies, including the common pitfalls that may arise when not properly implemented. The article also speaks to the pertinent taxation and commercial issues associated with those strategies that advisers must consider. This includes managing Div 7A obligations, being aware of the trust streaming implications, and maintaining the deductibility of interest on any borrowings associated with paying a beneficiary's entitlement from an asset revaluation reserve. The article concludes by envisaging a resurgence of activity in this area, particularly given the commercial outcomes that such strategies may achieve.

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Trusts 2020

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