The Honorable Bill Shorten announced on Friday, 4 March 2011 that the Federal Government is planning to legislatively address the current issues relating to the taxation of trusts highlighted in recent cases. These issues have been exacerbated by negative interpretations suggested by the Australia Taxation Office in recent months.
In particular, the Government intends to focus on the definition of income and the ability of trusts to stream different classes of income, such as capital gains and franked dividends, to different beneficiaries rather than distributing all income proportionately. If introduced, these changes will be effective from 1 July 2010, covering the current tax year.
Currently there is no draft legislation, however the announcement is a positive step and reinforcement that trusts are still a viable investment and business vehicle. Should you be concerned about the implications of these changes or require additional information, please contact Murray Howlett on (07) 3023 1300.