Fixed trust structures require examination

Professional advisers will need to be on the lookout for issues surrounding fixed trusts and also question when they are required following the ATO signalling its interest in the area, a specialist law firm has warned.

“A number of tax outcomes depend on a trust being a fixed trust and the beneficiaries having a fixed entitlement,” Cooper Grace Ward tax partner Scott Hay-Bartlem said.

“With the release of Practical Compliance Guideline 2016/D16, the ATO has highlighted its interest in this area so it will be important to identify when it will be best to have a fixed trust and what we should look for.”

Hay-Bartlem revealed the law firm had seen many unit trusts that were not fixed trusts.

“It is important to look at not just the circumstances but also the trust deed,” he said.

“For example, the trust deed must not allow the trustee to be able to redeem units without the consent of the affected unitholder, and there must be no discretion in whether and how the trustee distributes income and capital.”

Hay-Bartlem will delve deeper into the issue as well as others at the Cooper Grace Ward Adviser Training Day in Brisbane on 24 March.

The day will be preceded by the firm’s Annual SMSF Conference on 23 March, which will include an SMSF back-to-basics session and updates on the previous year in the SMSF space, followed by an exclusive workshop addressing SMSF and estate planning issues in relation to the 2016 budget.

Both events will feature presentations from lawyers specialising in tax, revenue, superannuation, estate planning, workplace relations and other areas of commercial law.

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