Public trading trusts and superannuation – proposed amendments may result in loss of franking credits

17 June 2015 Topics: Superannuation, Professional advisers, Tax and revenue, Tax disputes

Draft legislation (the Tax Laws Amendment (New Tax System for Managed Investment Schemes) Bill 2015) has been released to amend the public trading trust rules so they no longer apply to unit trusts where superannuation funds (including SMSFs) hold 20% or more of the issued units.

These amendments will apply from the date the Act receives royal assent, but it appears that, once royal assent is obtained, the provisions will apply for the financial year commencing 1 July 2015.

It is unclear from the proposed legislation exactly what is to happen in relation to trusts that are currently being treated as public trading trusts, because the exposure draft does not contain any transitional provisions.

One area of concern is that existing public trading trusts that have undistributed franking credits at 30 June 2015 (or tax payable in the 2016 year) may cease to be public trading trusts from 1 July 2015 and lose the ability to distribute those franking credits to unitholders after 1 July.

Until the legislation is finalised, we are not going to know if there will be any transitional provisions to deal with this issue. As a result, advisers should consider what steps can be taken before 30 June 2015 to deal with existing franking credits.

If you have any questions, please contact a member of our team.



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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.