UPDATE 63
DECEMBER 2012
A–Z OF TRUSTS
Anna Ziaras
Highlights

New author, Anna Ziaras, has extensively rewritten or updated the bulk
of the commentary in A–Z of Trusts. You can expect more excellent
new material from Anna in early 2013.

Get a head start in understanding the key features of the new trust
taxation regime outlined in the Federal Government policy options
paper, “Taxing trust income – options for reform” (see Recent
Developments).

The SCCASP Holdings case shows that a resolution to distribute
capital gain from a trust to an SMSF will now be taxed at penalty rates.
Stay on top of the special rules about distributing capital gains to
superannuation funds (see Recent Developments).

A recent ATO Decision Impact Statement regarding Atlantis Holdings
shows that it is inappropriate to use legislation like the Trustee Act
1925 (NSW) to challenge the Commissioner’s findings. Find out about
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the appropriate measures for challenging adverse findings (see Recent
Developments).

Draft Taxation Ruling 2012/D1 is in limbo after it caused confusion
among tax practitioners. Keep on top of the controversy about the
meaning of “income of the trust estate” (see Recent Developments).

Get a handle on the CGT consequences of making valid changes to
the terms of trust deeds described in Taxation Determination 2012/21
(see Recent Developments).

Trust schemes continue to be a compliance focus of the ATO. Take
note of the types of trust structures on the ATO’s radar (see Recent
Developments).

Are you aware of the new TFN withholding and reporting rules for
closely held trusts? Find out all you need to know about these changes
(see Recent Developments).

Protect your clients from ATO reviews by finding out how to correctly
complete labels 64A and 65W of the 2012 Trust tax return form (see
Recent Developments).

Clarify the situation regarding income equalisation clauses and
recharacterisation clauses in trust deeds. The Trust Consultation Subgroup discussed this at a recent meeting (see Recent Developments).

Is streaming of interest, dividends and royalties paid to non-residents
for withholding tax purposes allowed? The recent Trust Consultation
Sub-group meeting has provided up-to-date news about this (see
Recent Developments).

Do you have clients who run managed investment trusts? Familiarise
yourself with the new duty concession that’s available under an
amendment to the Duties Act 1997 (NSW) (see Recent Developments).

Explore further, in expanded commentary, the issues around
resettlement of trusts in relation to income tax, capital gains tax, stamp
duty and state duties (see paras 4~1120 to 4~1155).

Ensure you don’t share any popular misconceptions about Division 7A
as it applies to trust distributions to corporate beneficiaries (see para
4~1610).

Are you or your client the executor of a will? Find out how trust law may
impact you (see paras 7~5130 and 7~5300).

Discover the scenario where death constitutes a disposal of assets for
tax purposes (see para 7~5400).
A–Z of Trusts
2

Ensure you are making the most of exemptions to the CGT rules
relating to dwellings acquired from deceased estates (see para
7~5420).

Familiarise yourself with ATO views on the treatment of life and
remainder interests arising from a deceased estate (see para 7~5460).

The first half of the tab on Income Tax and CGT in relation to trusts in
A–Z of Trusts has been completely re-written to reflect changes in this
complex area. Ensure you are up to date with your responsibilities and
opportunities (see paras 8~1000 to 8~5740).

Unsure of the rules for taxing capital gains made through trust
structures? Brush up on the CGT provisions in relation to trusts,
including analysis of the specific CGT E events that apply only to trusts
(see paras 10~1100 to 10~1538).

Do you need to brush up on CGT rollover relief surrounding the transfer
of assets from a fixed trust to a company, including such transfers by
foreign residents with interest in a trust? Read the new summary of the
relevant legislation (see paras 10~1540 and 10~1543).

Investigate rollover relief for the transfer of CGT assets between trusts
(see paras 10~1550 to 10~1554).

Are your clients running small businesses? Learn more about
concessions to reduce, eliminate or provide rollover for a capital gain
made on a CGT asset used in a small business (see paras 10~1560 to
10~1770).

Managing a scrip for scrip takeover or merger offer? Examine the
options for CGT rollover relief when certain interests in trusts are
exchanged for similar ones in other entities (see paras 10~1820 to
10~1950).

The tab on State and Territory Taxes in A–Z of Trusts has been
completely rewritten and expanded to include taxes other than stamp
duty and more fully reflect current requirements. Ensure you know
where you stand (see paras 15~1000 to 15~9300).

Investigate the key principles of distributions from Australian
discretionary trust estates to non-resident beneficiaries (see para
16~1000).

Use the Raftland case to make sense of the anti-avoidance concept of
a ”sham” transaction (see para 16~1300).

Familiarise yourself with the Commissioner of Taxation’s powers under
s 263 and 264 notices (see para 16~1370).
A–Z of Trusts
3

Read about the impact of Project Wickenby’s war against secrecy
havens and the new Trust Taskforce that will operate in conjunction
with the project (see para 16~1400).

Examine the simplified and updated summary of the thin capitalisation
rules (see paras 16~1530 to 16~1535).

Take a look at the new summary of the transferor trust rules in Div
6AAA of ITAA, including the transferor’s role in the tax treatment of
non-resident trusts. The transferor trust rules have been flagged for
rewriting soon (see paras 17~1120 and 17~1240).

Refer to updated model financial accounts relevant to trusts (see paras
18~1260 to 18~1660).
A–Z of Trusts
4