Revenue aspects of testamentary trusts

CONTENTS

1     SCOPE OF THE PRESENTATION. 3

2     WHAT IS A TESTAMENTARY TRUST?. 3

3     WHAT ARE THE ADVANTAGES OF A TESTAMENTARY TRUST?. 4

4     TAXATION ISSUES. 5

4.1      Preliminary Comment 5

4.2      Higher minimum tax threshold for children under 18. 6

4.3      Borrowings and subsequent additions. 7

4.4      (Limited) benefits on accumulation of trust income. 7

4.5      CGT exemption on main residence in limited circumstances. 8

4.6      Franking credits and family trust elections. 9

4.7      Losses and family trust elections. 9

4.8      Distributions to corporate beneficiaries – Division 7A and UPEs. 11

5     RECENT TAXATION DEVELOPMENTS. 12

5.1      Preliminary comment 12

5.2      The taxable income and distributable trust income issue. 13

5.3      The effect of that issue on the provisions contained in trust deeds. 15

5.4      The “streaming” issue. 16

5.5      The Bamford decisions. 17

5.6      Implications of the Bamford decisions. 17

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