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Extending anti-avoidance rules for circular trust distributions

Key documents

In the 2018-19 Budget, the Government announced that it will extend a specific anti-avoidance rule for closely held trusts engaging in circular trust distributions to family trusts.

Currently, where family trusts act as beneficiaries of each other in a ’round robin’ arrangement, a distribution can be ultimately returned to the original trustee in a way that avoids any tax being paid on that amount. The Government has prepared draft legislation giving effect to the Budget announcement, which will better enable the ATO to pursue taxpayers entering into these arrangements and impose tax on such distributions at a rate equal to the top personal tax rate plus Medicare Levy.

This change will apply from 1 July 2019.

The Government is seeking stakeholders’ views on the exposure draft legislation and accompanying explanatory materials implementing this measure.

Responding

You can submit responses to this consultation up until 31 October 2018.

Interested parties are invited to comment on this consultation.

While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.

Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

How to respond

Post

Address written submissions to:

Gregory Derlacz
Senior Advisor
Small Business Entities and Industry Concessions Unit
Individuals and Indirect Tax Division
The Treasury
Langton Crescent
PARKES ACT 2600