The Board of Taxation had conducted a self-initiated review into the tax arrangements applying to bare trusts and similar arrangements. Bare trusts and similar arrangements are used widely in society by individuals, domestic and multinational businesses, and charities with almost $4.5 trillion in assets held via these arrangements by licensed custodians alone.
The Board of Taxation considered whether, and how, to legislate in respect of the current widespread practice of disregarding or looking through these trusts for income tax purposes. The practice appears not to be supported by Division 6 of Part III of the Income Tax Assessment Act 1936 for most types of bare trusts, and is only maintained by an ongoing administrative approach from the Commissioner of Taxation that may change should developments in law, such as a court decision, make it no longer tenable.
The review report, Tax Treatment of Bare Trusts and Similar Arrangements, is available at the Board of Taxation website.
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