The ATO has indicated that Draft Taxation Ruling TR 2012/D1, which gives the Commissioner’s preliminary views on the meaning of the expression “income of the trust estate” as used in Div 6 of Pt III of the ITAA 1936, would not be finalised whilst the Government is looking to reform the law in the area. Treasury released a policy design paper on 24 October 2012 which stated that the development of the proposed 2 design models (ie the economic benefits model and the proportionate assessment model) represents an effort to effectively balance competing policy considerations and achieve appropriate tax outcomes for users of trusts. The Government has also ruled out taxing trusts like companies.
Further details are in Issue 51 of the 2012 Thomson Reuters Weekly Tax Bulletin.
Keep up to date with all the tax news in the Weekly Tax Bulletin. You can subscribe to Australia’s No 1 tax news service here.