Discretionary trusts: are they still effective?
Source: Taxation In Australia Journal Article
Published Date: 1 May 2023
Discretionary trusts have been a constant staple for professional advisers when arranging their tax planning and asset protection strategies. However, their utility in this respect has come into sharp focus in recent times, whether it be the wider scope given to s 100A ITAA36 to limit the use of discretionary trusts to split income, the end of sub-trust arrangements to prevent Div 7A ITAA36 from applying to unpaid present entitlements, or distributions ostensibly made within the terms of a trust deed being ruled invalid. This article explores such recent developments, including the Guardian and BBlood litigation, and PCG 2021/4 on splitting professional services income. Moreover, it aims to outline what things advisers now need to be aware of when considering whether to use discretionary trusts as part of their tax planning and asset protection strategies. From an international perspective, the article also details recent developments for Australian discretionary trusts with overseas beneficiaries.
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Details
- Published By: Matthew Brittingham CTA
- Published On:1 May 2023
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