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Trust asset revaluation strategies … revisiting the practice
Published on 01 Mar 20 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
The seminal case of Fischer v Nemeske has accepted the effectiveness of asset revaluation reserves under trust law, reinvigorating the use of such reserves for the purposes of facilitating succession planning, asset protection and family exit objectives. This article explores the utility and mechanics of asset revaluation reserve strategies, including the common pitfalls that may arise when not properly implemented. The article also speaks to the pertinent taxation and commercial issues associated with those strategies that advisers must consider. This includes managing Div 7A obligations, being aware of the trust streaming implications, and maintaining the deductibility of interest on any borrowings associated with paying a beneficiary’s entitlement from an asset revaluation reserve. The article concludes by envisaging a resurgence of activity in this area, particularly given the commercial outcomes that such strategies may achieve.
Author profiles
Peter Slegers CTA
Peter Slegers, CTA, heads Cowell Clarke’s Tax & Revenue, Superannuation and Private Client practice groups. Peter advises and acts for a wide range of public and private companies and high net worth individuals and families. Peter’s areas of expertise include income tax (as it impacts on business and high net worth clients), capital gains tax, goods and services tax, state taxes, trust law and superannuation law. Peter has published numerous papers on trust structures and has considerable experience in this area. Peter is also a co-author of the Tax Institute’s SMSF Income Stream Guide and Cowell Clarke’s Australian Agribusiness Advisers’ Guide.
- Current at
16 April 2024
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