Control of discretionary trust

Prior to 1 July 2006

From 1 July 2006

From 1 July 2007

From 1 July 2009

If no beneficiary controlled the trust, it was controlled by the trustees or entities that could influence how the trustee made distributions from the trust, or by capital gains tax affiliates of those entities.

No change

The trustee no longer controls a discretionary trust. An entity will control a discretionary trust if the trustee acts, or could reasonably be expected to act, in accordance with the directions or wishes of the entity, its affiliates, or all of them together. This is in addition to a beneficiary who may control the trust under the 40% distribution test.

No change

If a trust does not have any taxable income from which to make a distribution, the trustee may nominate up to four beneficiaries to be controllers of the trust for that year.

Those beneficiaries were connected with the trust for the purposes of the maximum net asset value test and the active asset test.

No change

A beneficiary who is a nominated controller is connected with the trust for the purpose of the active asset test only, and not the maximum net asset value test or the aggregated turnover test.

No change

    Last modified: 21 Jun 2016QC 21145