Australia Consults On Fixed Trust Reforms
Wednesday, August 1, 2012
The Australian government is consulting on changes designed to create a more
workable approach for fixed trusts as part of its broader reform agenda for
the modernization of trust income taxation.
The proposals are made in a discussion paper which considers a number of options
for reform, including modifying or replacing the existing definition of "fixed
trust". According to Assistant Treasurer David Bradbury: "The options
canvassed in the discussion will address some of the issues of uncertainty and
complexity for taxpayers created by the current approach to the taxation of
Also on the horizon are wider changes to the tax treatment of trust income.
The government first consulted on reform proposals in November last year, working
with the Tax Design Advisory Panel and the Board of Taxation. It had intended
to implement its changes from July 1, 2013.
However, following feedback received during the consultation, it has decided
to push the start date back to July 1, 2014. Bradbury explained: "The government
has listened to the message from consultations that a later start date is preferred,
allowing more time to develop the law, and for industry to prepare for changes".
A policy design paper will be released in September, to further develop options
for a taxation model.
Similarly, the introduction of a new tax system for managed investment trusts
will now also have a start date of July 1, 2014. These reforms will therefore
coincide with the general update and rewrite of the trust provisions. The interim
streaming rules for managed investment trusts, introduced in 2011, will be extended
for a further two years to July 1, 2014.
The fixed trust discussion paper remains open for submissions until September