Session 1: Trust Distributions Revisited: Recharacterisation of Trust Income and Other Issues
Despite the High Court clarifying its position in FCT v Bamford and the Government introducing legislation to specifically allow the streaming of franked dividends and capital gains to particular beneficiaries, there is still widespread confusion amongst trustees, practitioners and clients as to what can or cannot be done when making distributions to beneficiaries. This session seeks to dispel the confusion and focuses on the following areas:Motivations for restructure - What are you protecting yourself from?
- The recharacterisation of trust income for tax purposes – the limits of the trustees powers
- The ATO view vs the profession and the courts
- Limits on recharacterisation of trust income – TA2016/12
- Practical tips for drafting distribution minutes in the light of the ATO view
- The importance of the trust deed in recharacterisation
- Strategies to stream income other than franked dividends and capital gains
- The limits of a trustee’s discretion - Trani v Trani, Re Marsella - do these cases have implications for trust taxation?
Session 2: Trust Resettlements, Clark’s Case and the Commissioner’s New Stance
Practitioners are continually faced with the dilemma of whether an amendment to the trust deed constitutes a resettlement of a trust. Even though the Commissioner made his views clear in TD 2012/21, confusion and uncertainty still abounds in the taxpayer community. This session seeks to clarify the misunderstanding and discusses the following areas:
- What is a resettlement?
- What are the income tax and CGT consequences?
- Review of TD 2012/21 and FCT v Clark  FCAFC 5
- Can I amend the trust deed without resettling?
- Practical scenarios (e.g. what happens if the deed is lost and a replacement deed is obtained, is that a trigger for a resettlement?)
- What sort of amendments will trigger a resettlement? (e.g. amendments to irrevocably remove a beneficiary)
- Are deeds of disclaimer an alternative to amending the deed to remove a beneficiary? - The Trustee for the Whitby Trust and Commissioner of Taxation
Session 3: Section 100A and Distributions to Adult Children: Avoiding the Sting in the Tail
Trustees often seek to optimise tax outcomes by ensuring distributions are tax effective. However, there can be significant and unwanted tax consequences if section 100A is triggered. This session examines the practical application of section 100A of the ITAA 1936 and how advisers can reduce the risks, including:
- What is a reimbursement agreement?
- What is an “ordinary family or commercial dealing”?
- Implications for discretionary trusts which “distribute” to adult children beneficiaries
- Implications for UPEs
- ATO scrutiny – what is the Commissioner’s latest position?