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15 June 2011 | Deeds of Amendment for Family Trusts - Bamford Decision


Due to the Bamford High Court decision there are new rules before Parliament around streaming of capital gains and franked dividends.

It is intended the new rules will apply to the 2010/2011 financial year.

The rules require among other things that trustees have clear power to classify and stream income and capital at their discretion.

Accordingly we recommend amendment of discretionary Trust Deeds prior to 30 June 2011 to cover :

 

1.       Clarifying the trustee’s discretion to stream income types (as well as a new and flexible definition of Income);

2.       Providing the trustee a clear discretion to determine whether a receipt is to be regarded as income or on capital account; 

3.       Providing the trustee a clear discretion to allocate expenses against income or capital account;

4.       Indemnifying the trustee from claims by beneficiaries for notional (non cash) income entitlements;

5.       Ensuring the amendment does not constitute a re-settlement.

 

Trustee Minutes are also required recording classification and streaming rationale, for franked dividends by 30 June and for capital gains by 31 August.

Please contact our Mike Poynter now if you require Deed/s of Amendment and example Trustee Minutes for you or your clients.

Please contact us if you desire further information on the topic. 

Michael Poynter
MCP Finance Brokers & Lawyers
Ph: (03) 9620 2001



MCP