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Exposure Draft - Improving the taxation of trust income


Wednesday, 13 April 2011

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On 13 April 2011, the Assistant Treasurer released for public consultation exposure draft legislation on changes to enable the streaming of capital gains and franked distributions as well as changes to ensure that low tax entities, especially exempt entities, cannot be used inappropriately to reduce the tax payable on the taxable income of a trust.

Broadly, these changes will ensure that capital gains and franked distributions (and their attached franking credits) are taken out of Division 6 of Part III of the Income Tax Assessment Act 1936 (Division 6) and taxed in accordance with the amended operation of Subdivisions 115-C and 207-B.

In addition, these changes will introduce specific anti-avoidance rules to address the opportunities that would otherwise exist for tax manipulation given the Government's decision to defer examination of options to better align the concept of 'income of the trust estate' with 'net income of the trust estate' until the broader update and rewrite of Division 6.

The exposure draft legislation implementing these changes is substantially, but not fully complete - for example, it does not cover necessary consequential amendments. The Government has however, decided to release this exposure draft legislation now to maximise the time available for interested stakeholders to provide comments on the core amendments to the law.

The explanatory materials accompanying these proposed changes will be released shortly.

An advanced summary of the explanatory materials has been released in the interim.

Making a submission

Interested parties are invited to comment on the exposure draft. While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment. Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

Closing date for submissions: Friday, 29 April 2011

Address written submissions to:
Small Business, Trusts and Regulation Unit
Business Tax Division
The Treasury
Langton Crescent
Email: SBTR@treasury.gov.au

For enquiries, please call Haydn Daw (02) 6263 2789.

Documents Available:

Acrobat (PDF) documents

 Acrobat (PDF)

Consultation Summary  33.03kb
Exposure Draft - Trust Income  57.42kb
Advanced summary of Explanatory Material  33.37kb
Explanatory Memorandum  136.96kb

Microsoft Word (RTF) documents

 Microsoft Word (RTF)

Consultation Summary  870.64kb
Exposure Draft - Trust Income  6,078.67kb
Advanced summary of Explanatory Material  228.67kb
Explanatory Memorandum  458.32kb

Related Items:

Submissions: Exposure Draft - Improving the taxation of trust Income - 2/06/2011

Treasury received nineteen submissions in response to the consultation on exposure draft legislation to improve the taxation of trust income. There were sixteen public submissions, and three confidential submissions. The submissions that do not contain confidential material are listed below and are accessible by selecting the author.

The opinions expressed in the submissions are those of the authors and do not necessarily reflect the views of the Government or the Treasury.

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