Trust Consultation Sub-group issues register

Issue 16. Streaming of capital gains and franked distributions

Issue 16	Following the High Court decision in Bamford (and subject to a contrary legislative intention), it appears that the proportionate approach would not allow for income of a particular character, derived by trustees, to be appointed or 'streamed' to specific beneficiaries in a manner which is effective for tax purposes.
Current status	Resolved Tax Laws Amendment (2011 Measures No. 5) Act 2011 enacted amendments to enable streaming of capital gains and franked distributions in respect of the 2010-11 and later income years.
History of issue	On 4 March 2011, the government released a discussion paper that canvassed options to implement recommendations made by the Board of Taxation to the operation of Division 6 for the 2010-11 income year. One recommendation was to 'enable the streaming of capital gains and franked distributions'. The ATO has prepared draft public rulings about the operation of Subdivisions 115-C and 207-B of the ITAA 1997 in light of the High Court's adoption of the proportionate approach in Bamford. Given the announced changes to the law, the ATO will not proceed to publish these rulings.
Treasury advised	Yes.