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 fixed trusts".
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 14.