Do your Client's Trust Deeds Allow Streaming Post Bamford Decision?

Morrows Legal recommends as a service to your clients that their trust deeds be reviewed to ensure that the Trustee has the power to stream, and if deemed necessary the trust deed be amended, or a new deed created.

The following situations may be beneficial to stream income, rather than adopt the proportional method:

Capital Gains
Distributions to beneficiaries who have existing capital losses
Distributions of Not Taxable Australian Asset capital gains eg shares to be streamed to beneficiaries who are non-residents
Distributions to beneficiaries to achieve the 10% income test rule for personal superannuation contributions

Dividend Income
Distributions to beneficiaries such as non-residents, charities,  low marginal rate tax payers, operating companies
Enables distribution of dividend income to come under the $5,000 threshold test for the holding period 45 day rule if no trust election has been made

Client Letter
For those clients you consider it is beneficial to have their deeds reviewed, we have attached a pro-forma letter you may wish to adopt.
To view this letter please click here.

Morrows Legal Services & Professional Fees

1. (i) Trust Deed Review
Morrows Legal review your clients trust deeds to determine whether they give the trustee power to classify and stream income at their discretion.
If it is determined that the deed does allow for streaming no further action is required.

A fixed fee of $440 (inc GST) is charged for this review.

1. (ii) Trust Deed Update
If it is determined by Morrows Legal that a trust deed does not allow for streaming, a decision is required by the trustee whether to;
    (a)    Amend the Trust Deed, or
    (b)   Create a new Trust as a beneficiary
Once the trustee has considered all the issues associated with amending the existing trust deed, or creating a trust Morrows Legal can then proceed on their instruction.

A fixed fee of $220 (inc GST) is charged for a Deed of Amendment.

2. Trust Deed Review & Update
Where the Trustee directs Morrows Legal to review and update the trust deed in one instruction.

A fixed fee of $550 (inc GST) is charged for this process.

3. New Trust
An alternative to amending the Trust Deed is the creation of a new Trust to which trust distributions may be made and from which income and capital can be streamed. This alternative is available where the original Trust Deed allows trust distributions to Trusts in which a beneficiary has an interest.
The creation of a Trust governed by its own separate Trust Deed as a beneficiary removes the risk of the courts interpreting a Trust Deed amendment as a resettlement.

A fixed fee of $550 (inc GST) is charged for a new Trust Deed.