Will the ATO Commissioner accept that your trust is a fixed trust? – PCG 2016/D16

Most trust deeds, including most unit trust deeds, will not satisfy the requirements to be a 'fixed trust'. However, if a trust does not qualify as a fixed trust, the Commissioner has a discretion to still treat the trust as if it is a fixed trust. The Commissioner has released draft Practical Compliance Guideline 2016/D16, which is intended to give some guidance as to how the Commissioner might exercise this discretion.

Whether beneficiaries have 'fixed entitlements' in trusts is important for a number of tax provisions. For example, if beneficiaries/unitholders do not have 'fixed entitlements':

• the rules for carrying forward losses are more complex and may prevent prior year losses being available against income of later years;