While a full-scale review of the taxation of entitlements from discretionary trusts continues, the ATO is enforcing new rules on streaming of capital gains benefits and franked dividends. Tax expert Michael Jones of Cummings Flavel McCormack says it's more complicated than it was, and it's important that the Trust Deed includes the power to stream, and the trust's accounts and records set out the specific entitlements to beneficiaries. The Federal Government has finally acknowledged the importance of discretionary trusts in family business - there are more than 600,000 trusts now in place. Following the review, a new permanent taxation system is not likely to be in place before July 1, 2013.
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