Contact: Vessa Playfair
Deloitte
Director of Communications
+61 (0) 419 267 676

Contact: Kel Fitzalan
Deloitte
Partner
+61 (0) 2 9322 5331

Changes announced in the Budget will make trusts more flexible for families to accumulate their wealth in a tax effective way, according to Kel Fitzalan, a tax partner at Deloitte.

It allows family trust elections to be changed so the trust can be administered to a wider family group.

Family trusts are required to make a choice to ensure certain tax losses and imputation credits are available for the family group.

Currently the choice cannot be changed, which restricts the administration of the trust to a narrower family group.

“While there is no detail regarding when changes will be allowed, I am hopeful that one circumstance will include where the patriarch of the family dies,” said Mr Fitzalan.

“In these circumstances, the changes will allow the rest of the family to make a new choice more appropriate to the next generation,” he said.

The definition of family group will also be extended to include former spouses and widows or widowers of family group members with new spouses.

Currently, distributions from family trusts to these groups are subject to penalty tax.

Mr Fitzalan said the changes indicate the Government’s acceptance of family trusts.