|
|
The Effectiveness of Testamentary Trusts Following the Ralph Report |
Trusts, including testamentary trusts, may be affected by the current overhaul of the taxation system. Below is the current position for testamentary trusts. |
1. It is proposed that the present concessional treatment of distributions to minor beneficiaries from testamentary trusts will continue. |
2. It has been recommended that the current concessional CGT treatment for the transfer of assets:
(a) from a deceased person to the executor;
(b) from an executor to a beneficiary who is a natural person;
(c) by an executor an entity which is either a registered charitable organisation or all of the members of which are individuals will continue so that it is not considered to be a realisation of a capital gain. |
3. The distribution from a testamentary trust of an asset which had been owned by the deceased will also not give rise to any realisation of a capital gain provided the assets is transferred to:
(i) a beneficiary who was a relative of the deceased person; or
(ii) a beneficiary who is not a relative of the deceased person and the transfer occurs within two (2) years of the date of death. |
4. While the transfer of assets in the circumstances set out in 3 will not give rise to a realisation of a capital gain it is intended that, subject to retaining the concessional treatment of distributions to minors, in all other respects the testamentary trust would be treated the same as any other type of trust and would be subject to entity taxation and other Ralph reform measures including the "profits first" rule. |
According to the press we can expect draft legislation any day. It is a case of "watch this space". |
