The taxation of trusts and beneficiaries of trusts continues to
be an ever-evolving practice.
On 3 July 2014 the ATO released a fact sheet outlining its views
on an anti-avoidance rule (already in existence for over thirty
years) and indicated that the rule may have broader application
than many will have assumed.
Whilst representatives of the tax profession have been consulted
on the fact sheet, it is fair to say that its contents will be
contentious.
Set out below is some background on the issue followed by an
outline of the key points arising from the fact sheet.
Background
Section 100A was introduced in 1979 specifically to overcome
certain "trust stripping" arrangements that were designed
to enable trust profits. This section was introduced to escape tax,
but has always had the potential for broader application than its
intended purpose due to the general wording of the section.
