The Assistant Treasurer, The Hon. Bill Shorten, has announced a public consultation process as the first step towards updating the trust income tax provisions in Division 6 of Pt III of the Income Tax Assessment Act 1936 and rewriting them into the Income Tax Assessment Act 1997. Mr Shorten said an initial consultation paper will be developed for release in the first part of 2011.
He said any options will seek to ensure that net taxable income of a trust is assessed primarily to beneficiaries. Trustees will continue to be assessed only to the extent that amounts of net taxable income are not otherwise assessable to beneficiaries. Importantly, Mr Shorten said the options will not include the taxation of trusts as companies, which would be a major departure from the current law.
Mr Shorten has also announced that the Australian Federal Government will introduce amendments before Thursday 30 June, so that beneficiaries of farming trusts can continue to use the primary producer averaging and farm management deposit provisions when such trusts incur tax losses.