Private Client Services Archive

SMSFs – property development & limited recourse borrowing

There appears to be growing enthusiasm amongst some advisers to recommend that their clients undertake property developments in their SMSFs, using limited recourse borrowing for finance. The basis for that recommendation appears to be that there are arguable grounds for doing so and the fact that the ATO has not expressly prohibited SMSFs from doing […]

Philanthropic trusts for all

Philanthropic trusts for all Increasing numbers of clients are expressing interest in establishing some form of trust fund for philanthropic purposes – either during their lifetimes as part of a family project (e.g to commemorate a deceased family member) or by way of Will upon death.  Different options for achieving family philanthropic outcomes The tax […]

Protective trusts & special disability trusts

In Will preparation and estate planning generally, particular consideration should be given to the possible establishment of protective trusts and Special Disability Trusts (SDTs) for any family members who are vulnerable because of, e.g: serious/significant physical disabilities; mental illness; gambling, alcohol or drug addition; spendthrift tendencies. If a potential beneficiary does have a serious disability, […]

So You Don’t Need To Make A Will? Think Again!

Don’t make the mistake of thinking that you don’t need a valid and binding Will. It is surprising the number of people who don’t have a Will.  When asked why, the answers are quite varied – “I don’t have the time”; “only old people need a Will”; “If I make a Will I might die”; […]

Revenue aspects of testamentary trusts

This is a paper delivered by Tony at the Law Institute of Victoria’s Succession Law Conference on 9 September 2011. It deals with some of the more important incomee tax, cappital gains tax and Victorian stamp duty issues arising out of the operation of discretionary trusts created by Wll.

Dealing With UPEs Which Arose In The 2010 Tax Year

This piece looks at some of the more important issues for dealing with unpaid present entitlements of discretionary trusts (UPEs) which arose at the end of the 2010 tax year in favour of corporate beneficiaries within the same family groups. This article is aimed at explaining the investment options set out in the Commissioner’s Practice […]

UPEs to companies arising after 16 December 2009 – analysis and comment

With effect from 16 December 2009 the Commissioner of Taxation has adopted a new approach in dealing with distributions of income made by trusts to related family companies where the amount of the distribution remains unpaid at the end of the tax year in which its made. In effect, the Commissioner now treats the unpaid present entitlement (UPE) owing by the trust as being a loan made by the company to the trust. Under Division 7A, if a loan is made by a company to a related trust, the amount of that loan will be treated as an unfranked dividend paid by the company to the trust in the year in which the loan is made. Prior to the Commissioner adopting this approach, it was common for trusts to “shelter” income at the corporate tax rate of 30% by distributing amounts to corporate beneficiaries. This step may now only be taken in accordance with the requirements now set out by the Commissioner is a new Practice Statement.

UPEs which arose in the 2010 Year – what to do before 30 June 2011

Unpaid present entitlements (UPEs) of corporate beneficiaries for the year ending 30 June 2010 are treated slightly differently from other UPEs in PS LA 2010/4 (Practice Statement). This Information Brief looks at what needs to be done before the end of the current tax year to protect clients’ (and advisers’) positions.

We have been awaiting the issue of a promised fact sheet from the ATO to clarify some important issues – not the least of which is clarification of when investment loan agreements for the 2010 tax year should be entered into.

We understand the ATO’s view to be that agreements must be entered into by 30 June 2011 to satisfy the Practice Statement. In the absence of a fact sheet being issued by the end of May, we have decided to publish our commentary.

Goodbye Trade Practices Act

The new federal Competition and Consumer Act 2010 (CCA) has replaced the Trade Practices Act (TPA). The CCA has introduced a number of important changes to the law, including strengthened consumer protections and greater powers to regulators such as the ACCC. Businesses will need to be aware of their new rights and obligations.