The Tax Office on Wed 1.2.2012, released this Draft TD which states the ATO view that it is possible for a beneficiary of a trust estate to be reasonably expected to receive a share of the net financial benefit referable to a capital gain for the purposes of s 115-228(1)(a) of the ITAA 1997, despite the making of the capital gain not being established until after the end of the income year. In this regard, the Draft emphasizes that the “reasonable expectation” requirement is directed to the future receipt of an amount referable to the gain should it arise, not to the likelihood of the gain itself occurring.
The Draft provides several examples, including the following: The trust deed for the Morse Trust provides that Hercules is entitled to receive all of the income and any gains or proceeds in respect of shares held in Dairy Pty Ltd. The trustee has no power to vary the terms of the trust. Accordingly, the deed establishes a reasonable expectation of Hercules receiving the financial benefit referable to any capital gain that is made by the trust estate in respect of those shares.
COMMENTS are due by 2 March 2012. ATO contact: Amanda Connolly – Tel: (07) 3213 5456; Fax: (07) 3213 5971; Email: amanda.connolly@ato.gov.au
[LTN 20, 1/2]