TAG Tax

The Federal Government have just released the Exposure Draft (“ED”) legislation for its proposed taxation of discretionary trusts and unsurprisingly, it reflects the positions adopted in the Consultation paper previously released. There are a number of pieces of legislation forming the changes with the Explanatory Memorandums (“EM”) noting that additional legislation will follow.

The ED’s provide some welcome clarity in relation to a number of aspects and introduce another election (called the “Excluded election trust” or EET, click here for more information) that trustees of discretionary (non fixed) trusts may wish to consider as part of navigating the fundamental change.

What trusts are subject to the measures?

The trusts subject to the new regime are to be known as a “minimum tax trust” (“MTT”). A MTT is not any of the following:

• a fixed trust, click here to learn what a fixed trust is;
• a special disability trust;
• the trust estate of a deceased person (ie whilst under administration not testamentary trusts);
• a complying superannuation entity;
• a trust of a kind determined in a legislative instrument.

Read the entire article.