Today the Government has released a discussion paper which invites stakeholder views on options for a more workable approach for fixed trusts.
The discussion paper considers a number of options for reform, including modifying or replacing the existing definition of 'fixed trust'.
"The options canvassed in the discussion will address some of the issues of uncertainty and complexity for taxpayers created by the current approach to the taxation of fixed trusts," said Mr Bradbury.
The Government is also progressing the broader trust reform agenda to modernise the taxation of trust income. On 21 November 2011, the Government released an initial consultation paper which canvassed a number of options for reforming the taxation of trusts, drawing on the expertise of the private sector through the Tax Design Advisory Panel and the Board of Taxation.
The Government received substantial feedback from interested stakeholders following the release of this paper and an extensive community consultation process.
Following feedback from stakeholders during this process, the Government will also be amending the proposed start date for the broader reform of trust income taxation from 1 July 2013 until 1 July 2014.
"The Government has listened to the message from consultations that a later start date is preferred, allowing more time to develop the law, and for industry to prepare for changes," said Mr Bradbury.
The Government will release a policy design paper in September which will further develop options for a model for the taxation of trusts.
The new tax system for managed investment trusts will now also have a start date of 1 July 2014, to coincide with the general update and rewrite of the trust provisions.
In announcing this revised start date for the new tax system for managed investment trusts, the Government will also extend the interim streaming rules for managed investment trusts, introduced in 2011, for a further two years to 1 July 2014.
The fixed trust discussion paper is available on the Treasury website. Submission close on 14 September 2012.
Revised Consultation Timetable for Trust Reforms
| Steps | Indicative timeframes |
|---|---|
| Release of fixed trust discussion paper | July 2012 |
| Release of Division 6 policy design paper | September 2012 |
| Ongoing managed investment trust consultation | August – November 2012 |
| Division 6 consultation roundtables (before close of public submissions) | September – October 2012 |
| Release of exposure draft legislation (Division 6, fixed trusts* & MITs) | Early 2013 |
| Consultation roundtables (before close of public submissions) | Early 2013 |
| Introduction of legislation (Division 6, fixed trusts* & MITs) | Mid 2013 |