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Trust streaming post-Bamford


The High Court decision in the Bamford case in 2010 raised uncertainty about the operation of the provisions in tax legislation which confer "flow-through" status on capital gains and franked dividend amounts appointed to specific beneficiaries of trusts. The government's response was to enact amending legislation designed to ensure that, for the 2010-11 and later income years, where a trustee has the power to appoint or stream capital gains and/or franked distributions (including any attached franking credits) to specific beneficiaries, this will be effective for tax purposes.

This article examines in detail how the new provisions work and provides examples. It is pointed out that the calculations necessary to work out who is assessable on what part of a capital gain or a franked distribution that has been streamed to a particular beneficiary are highly complex, and the timing
rules will put significant pressure on trustees and their advisers.

Author profile:

Author Photo - Robert Allerdice CTA
Robert Allerdice CTA
Robert has tax experience spanning 33 years, and is currently The Tax Institute's Tax Consultant. In this role, Robert edits TAXVINE, The Tax Institute's weekly email newsletter, and reviews all articles for publication in two of The Tax Institute's journals, Taxation in Australia and the Tax Specialist. Robert also assists in The Tax Institute's Structured Education program, filling the roles of Advanced Tax Convenor and Applied Tax Convenor. Robert was admitted as a solicitor of the NSW Supreme Court in 1974 and practised as a tax lawyer from 1978 to 1993. He then accepted positions as Senior Lecturer, firstly with ATAX at the University of New South Wales, and then at the Law School at the University of Sydney. Robert joined The Tax Institute in June 2000. Current at 01 February 2012 Click here to expand/collapse more articles by Robert Allerdice.
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