Last week we considered discretionary partnerships, absolutely entitled trusts and the trustee duties involved in making those structures work. This week we turn to the proposed rollover: how can an existing discretionary trust move into a different structure?
Proposed Subdivision 126-C of the Income Tax (Transitional Provisions) Act 1997 provides relief for qualifying transfers between 1 July 2027 and 30 June 2030. Its conditions bring us back to the question running through this series: how much discretion can a structure retain?
Come prepared to discuss:
- What must move, and to whom? The requirement to transfer all relevant assets to one transferee, the exceptions for retained assets, and the continuity requirements.
- Can last week’s partnership structure qualify? What are “material discretionary elements” affecting members’ rights or interests, and how does the restriction through the fourth income year after the final transfer apply?
- What does the rollover solve? The income tax consequences it switches off, the trustee powers and duties needed to implement the restructure, and the stamp duty and other consequences that remain.
Required reading: Treasury’s exposure draft rollover provisions and accompanying Explanatory Materials
Particularly proposed ss 126-430 and 126-440.
Discussion led by Adrian Cartland