This paper was presented to The Tax Institute, Western Australian Division, 29 April 2016
Recent decisions such as Mercanti v Mercanti and Oswal v FCT show the continued complexities and risks when undertaking trust instrument amendments.
This paper discusses the practical problems faced in dealing with trust amendments and the approaches for managing the risk of resettlement, including:
- how to construe a trust instrument including the power of amendment
- drafting approaches to manage the Review of Taxation of Trusts and TR 2012/D1 Income of the trust estate
- alternatives to some amendments to achieve a similar result
- consequences of invalid or ineffective amendments
- common amendments to consider to modernise a trust with checklist
- the FCT and the OSR attitudes to common amendments and continuing uncertainties
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