ATO avoids trust 'nightmare'

The Institute of Public Accountants (IPA) has claimed the Australian Taxation Office (ATO) avoided an administrative nightmare by moving to provide assistance around the taxation of trust income for the 2010-12 financial year.

The IPA claimed the potential administrative nightmare would have occurred as a result of new legislation passed on 23 June enabling the streaming of franked dividends and capital gains for tax purposes.

“Unfortunately, the new rules required certain things to be done by trustees before 30 June which would have caused practical difficulties for tax practitioners and trustees,” it said.

“The ATO, to its credit, has introduced two administrative arrangements to help practitioners and trustees deal with the new legislative requirements,” the IPA said.

It said the first arrangement would see an extension of time for trustees to record a beneficiary’s entitlement to a franked distribution, and the second was that the ATO would not be selecting cases for review or audit in the 2010-11 financial year.

Commenting on the development, IPA senior tax adviser Tony Greco said the ATO had recognised the need to act quickly on the matter.

He said that as the end of the financial year had loomed, the changes might have caused an administration nightmare for trustees and tax practitioners.