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Trust asset revaluation strategies … revisiting the practice


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.

Author profiles

Peter Slegers CTA
Photo of author, Peter SLEGERS Peter heads Cowell Clarke's tax and revenue practice group. He advises and acts for a wide range of public and private companies as well as for the trustees of self managed superannuation funds. Peter’s areas of expertise include: income tax (as it impacts on business and high net worth clients); capital gains tax; goods and services tax; state taxes and superannuation law. Peter is regularly involved in advising SMSF trustees on issues associated with superannuation income streams. Peter is a member of the Australian Institute of Company Directors and the SMSF Professionals Association of Australia Ltd in addition to being a member of the Tax Institute’s South Australian State Council. - Current at 08 October 2019
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Josh Pascale
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