Australian trusts tax handbook 2015-16. PDF
Preview Australian trusts tax handbook 2015-16.
Australian Trusts Tax Handbook 2016-17 Anna Ziaras PublishedinSydneyby ThomsonReuters(Professional)AustraliaLimitedABN64058914668 19HarrisStreet,Pyrmont,NSW ACataloguing-in-PublicationentryforthisbookisavailablefromtheNationalLibraryofAustralia. ISBN9780864609809 MaterialCode:41970543 ©2016ThomsonReuters(Professional)AustraliaLimited Thispublicationiscopyright.Otherthanforthepurposesofandsubjecttotheconditionsprescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmittedwithoutpriorwrittenpermission.Inquiriesshouldbeaddressedtothepublishers. All legislative material herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permitscertainreproductionandpublicationofCommonwealthlegislation.Inparticular,s182Aofthe Actenablesacompletecopytobemadebyoronbehalfofaparticularperson.Forreproductionor publicationbeyondthatpermittedbytheAct,permissionshouldbesoughtinwriting.Requestsshould besubmittedonlineathttp://www.ag.gov.au/cca,faxedto(02)62505989ormailedtoCommonwealth Copyright Administration, Attorney-General’s Department, Robert Garran Offices, National Circuit, BartonACT2600. ProductDeveloper:PipHughes PrintedbyLigarePtyLtd,Riverwood,NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification(PEFC).PEFCiscommittedtosustainableforestmanagementthroughthirdpartyforest certificationofresponsiblymanagedforests.Formoreinfo:http://www.pefc.org ABOUT THE AUTHORS Anna Ziaras Anna Ziaras is the author of A-Z of Trusts and writes tax commentary for Thomson Reuters’ income tax and GST services. She was previously a barrister at the Victorian Bar. PREVIOUS CONTRIBUTING AUTHORS George Kolliou George Kolliou is the Principal of KOLLIOUTAX Pty Ltd – Lawyers and has worked in tax for over 25 years first as an accountant and now as a lawyer. He advises accountants, lawyers, SME clients and family businesses on tax matters with an emphasis on trusts, estate planning, business structuring and tax litigation. George is a Fellow of the Taxation Institute of Australia, the Institute of Public Accountants and a Member of the Law Institute of Victoria. George was also a contributing author to the first edition of the Australian Trusts Tax Handbook. Kirk Wilson Kirk Wilson is a respected author and commentator on all matters involving CGT. A Senior Tax Writer with Thomson Reuters, Kirk writes extensively on CGT for a range of our publications including the Australian Tax Handbook and tax news services, such as the Weekly Tax Bulletin and CGT Bulletin. Pip Hughes Pip Hughes has a deep understanding of the tax laws gained from many yearsexperienceintaxpublishing,bothasataxwriterandindevelopingawide range of products for the tax and accounting profession. She has been involved in writing detailed tax commentary for key income tax services as well as concise explanations of the tax law for major annual tax books. David Coombes DavidCoombesisanaccreditedtaxlawspecialistandhasparticularexpertise in income tax, CGT, GST, stamp duty and other indirect taxes. Having previously worked at Norton Rose Australia, David’s contribution to the first edition of the Australian Trusts Tax Handbook was written in co-authorship with SeniorAssociate,Anna Wilson. Robin Pennell Robin Pennell is a chartered accountant and Associate Director in the firm ShineWingAustralia(formerlyMooreStephensMelbourne),whichhasprovided cost effective consulting, technology, financial planning, tax and assurance solutions to mid-sized organisations since 1935. 2016THOMSONREUTERS iii AUSTRALIANTRUSTSTAXHANDBOOK2016-17 iv 2016THOMSONREUTERS PREFACE The Australian Trusts Tax Handbook 2016-17 is a practical guide to the rules relatingtothetaxationoftrusts.Itisstreamlinedtomeettheneedsoftaxpayers, students, practitioners and advisers, and brings together all the key tax provisionsandconceptsintotheonepublication,withplainEnglishexplanations, definitions, examples, case studies, sample trust deed clauses, tips and alerts. The proposal to rewrite and simplify the trust income tax provisions has stalled, so taxpayers, practitioners and advisers must continue to apply the complex rules in Div 6 of the ITAA1936 and the streaming provisions of the ITAA1997. To assist in this task, the Australian Trusts Tax Handbook includes step-by-step guides on: • how to calculate the income and net income of a trust; • how to stream capital gains and franked distributions; • how to make effective trust distributions; and • how to draft the distribution minutes. This edition of the Australian Trusts Tax Handbook has been restructured to includeadedicatedchapterontrustsandsmallbusinessrelief(chapter8),which focusesontheCGTconcessionsandthenewrestructurerolloverfordiscretionary trusts and other small business entities. There is also a new chapter on the state and territory taxes affecting trusts (chapter 17). Up to date as at 30 June 2016. Thomson Reuters 30 June 2016 2016THOMSONREUTERS v AUSTRALIANTRUSTSTAXHANDBOOK2016-17 vi 2016THOMSONREUTERS TABLE OF CONTENTS About the authors............................................................................................................ iii Preface................................................................................................................................ v Table of contents..............................................................................................................vii Table of abbreviations...................................................................................................... ix PART 1 – GENERAL PRINCIPLES Ch 1 — Key trust concepts...................................................................................... 3 Ch 2 — The importance of the trust deed.......................................................... 15 PART 2 – TRUST INCOME Ch 3 — Taxation of trust income – Div 6........................................................... 49 Ch 4 — Streaming of trust income....................................................................... 95 Ch 5 — Trusts and capital gains tax.................................................................. 125 Ch 6 — Trust-related deductions........................................................................ 163 Ch 7 — Trust losses............................................................................................... 171 PART 3 – TAX CONCESSIONS Ch 8 — Trusts and small business relief........................................................... 189 Ch 9 — Primary producer concessions for beneficiaries................................ 211 PART 4 – INTEGRITY MEASURES Ch 10 —Anti-avoidance rules............................................................................ 219 Ch 11 — Trusts and deemed dividends – Div 7A...........................................229 Ch 12 — Closely held trusts................................................................................ 275 Ch 13 — Unearned income of children............................................................. 281 PART 5 – ADMINISTRATION Ch 14 —Administration, tax returns, tax rates............................................... 291 Ch 15 — Rates of tax............................................................................................ 301 2016THOMSONREUTERS vii AUSTRALIANTRUSTSTAXHANDBOOK2016-17 PART 6 – OTHER ISSUES Ch 16 — Review of trust tax provisions........................................................... 309 Ch 17 — State and territory taxes...................................................................... 315 Index.........................................................................................................................325 viii 2016THOMSONREUTERS ABBREVIATIONS Abbreviations used extensively throughout this publication are listed below. AAT AdministrativeAppeals Tribunal ABN Australian business number ATO Australian Taxation Office ATO ID ATO Interpretative Decision ATR Australian Tax Reports CGT capital gains tax FCA Federal Court ofAustralia FCT Federal Commissioner of Taxation FMD farm management deposit GST goods and services tax GSTAct ANewTaxSystem(GoodsAndServicesTax)Act 1999 IT Income Tax Ruling (old series) ITAA1936 Income Tax Assessment Act 1936 ITAA1997 Income Tax Assessment Act 1997 LCG Law Companion Guidelines LPR legal personal representative MIT managed investment trust MT Miscellaneous Taxation Ruling PAYG PayAs You Go PS LA Practice Statement LawAdministration SBPP small business participation percentage TAA Taxation Administration Act 1953 TB trustee beneficiary TD Taxation Determination TFN tax file number TR Taxation Ruling Tax Office Australian Taxation Office UPE unpaid present entitlement 2016THOMSONREUTERS ix AUSTRALIANTRUSTSTAXHANDBOOK2016-17 x 2016THOMSONREUTERS
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