Shorten introduces MIT legislation

The Assistant Treasurer and Minister for Financial Services, Bill Shorten (pictured), has introduced legislation that will ensure capital gains and franked distributions can continue to be ‘streamed’ through trusts.

The changes would apply to approximately 660,000 trusts in Australia, specifically those that stream capital gains and franked distributions.

Trusts will be able to use the current approach until the Government’s new tax system for managed investment trusts starts on 1 July 2012.

The statement released by the Assistant Treasurer said the recent High Court decision in Commissioner of Taxation v Bamford highlighted ongoing discrepancies between the treatment of trust income by trust laws on the one hand, and by the tax system on the other.

“The introduction of this legislation delivers on the Government’s commitment to clarify the current uncertainty about when the capital gains and franked distributions, including any attached franking credits, of a trust can be effectively streamed for tax purposes,” Shorten said.

Shorten added those changes have been designed to minimise any disruption to trust by working with the existing operation of Division 6 of Part III of the Income Tax Assessment Act 1936.

“As a result, the changes appear complex; however, for trusts that do not stream any capital gains or franked distributions to specific beneficiaries, the changes will broadly produce the same outcome as the current law,” Shorten stated.