Fixed or not? Are unit trusts fixed trusts and the new ATO safe harbours in PCG 2016/16

The ATO has confirmed in Practical Compliance Guideline PCG 2016/16 that, unless unitholders have a 'fixed entitlement' to all income and capital of the trust, a unit trust will not qualify as a 'fixed trust'.

Most unit trusts (including some described as 'fixed' trusts) will not qualify as a 'fixed trust' because the unitholders do not have a 'fixed entitlement' to income and capital. For example, a unit trust may not qualify as a fixed trust if:

• the trust deed can be amended without the unanimous approval of unitholders;
• the trustee can issue new units or redeem existing units other than at market value;
• the trustee can make gifts;
• the deed allows for different classes of units;