Update Family Trust for streaming & Bamford update
In a Family Trust you 'stream' different categories of trust income to particular beneficiaries. But only if you have the streaming & Bamford update. This reduces your overall tax. For example, in your annual trust minutes you may distribute:
1. a capital loss to John
2. a capital gain from an asset (held over one year) to Mavis (a company can't access the CGT relief)
3. a capital gain from an asset held less than one year to a company beneficiary
4. distribute to company beneficiary because of its fixed rate of tax
5. imputation credit to Julie
If a person can access a tax concession then you distribute to that beneficiary. You hunt down beneficiaries that reduce your overall tax.
Before the Bamford case, the ATO assumed that you could do the above. After Bamford, the ATO withdrew its Rulings. The new ATO ruling said that you can't stream unless you have that exact power in your Family Trust Deed. This is the streaming and Bamford update.
The Streaming Rules came into effect on 29 June 2011. They set out the requirements for capital gains and franked dividends to be ‘streamed’ by the trustee of a trust to specific beneficiaries. No longer can trustees automatically stream income. This is unless the Family Trust deed expresses empowers the trustee to stream. See Commissioner of Taxation v Phillip Bamford & Ors  HCA 10.
What categories are required?
Have a look at our 'Sample document' above. We have developed a unique group of categories with open classes for streaming. This list is based on the ATO audits we have attended and our legal research.
* Plus, categories mentioned in any Australian Taxation Office publication, from time to time; and
* any combination or part of the above
Can you amend your Family Trust Deed for 'streaming'?
Almost all 2011 and older trust deeds must be updated. Amend your trust deed if it does not contain adequate streaming powers. The amendment has no adverse tax consequences. It is not a 'resettlement' of the Family Trust. Our letter confirms this.
What do I get?
The legal document that is emailed to you as a locked PDF contains:
* The Bamford and streaming update of the Family Trust Deed. It is fully compliant with the ATO's new views & Thomas v FCT  FCAFC 57
* Minutes for the Update - for your Accountant's due diligence file
* A letter to you outlining what the Update has achieved
Telephone us. We can help you answer the questions as you build the document.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National taxation and trust law firm
Mobile: 0477 796 959
National: 1800 141 612
Direct: 08 6389 0100
3. Or update for Bamford streaming PLUS the Deed PLUS update the Appointor & Trustee:
To prepare the Annual Trust Distribution Minutes:
1. To deal with Division 7A (loan from your company to the Family Trust):
2. Or, to forgive the 'loan account' and UPEs (loans from humans to Family Trust):
To wind up and vest the Family Trust, when you no longer want it: