NO.095

The Government is releasing an exposure draft of legislation to tax certain trusts like

companies with effect from 1 July 2001.

This legislation will implement the Government’s policy, which was announced in A

New Tax System, of introducing greater consistency in the taxation of entities.

There has been extensive consultation in the development of this legislation. The

exposure draft will provide further opportunity for comment on the operation of the new

arrangements. The exposure draft legislation also covers the simplified imputation system

and franking credits for foreign dividend withholding tax, and an accompanying explanatory

statement.

The proposed legislation for taxing trusts like companies achieves the objective of

greater consistency in the taxation of entities while minimising compliance and

restructuring costs. Under this approach, non fixed trusts will be taxed like companies.

Broadly, companies, fixed trusts, limited partnerships and co-operatives will retain their

current tax treatment. This approach removes the requirement for the introduction of a

collective investment vehicle regime.

The draft explanatory statement which accompanies the exposure draft outlines the areas

where further legislation will be introduced to complete the Government’s announced

policy.

The release of exposure draft legislation provides the opportunity for additional

comment on the proposed law and is a further demonstration of the Government’s

commitment to a high level of community involvement in the implementation of its tax

reform agenda. The exposure draft can be obtained from the Treasury internet site (www.treasury.gov.au/businesstax) and

the ATO web site (www.ato.gov.au).

To facilitate introduction of the legislation into Parliament, comments on the exposure

draft should be received by 3 November 2000.

Comments should be sent to:

Assistant Commissioner

Law Design and Development (Entities)

PO Box 900

Civic Square ACT 2608

CANBERRA

11 October 2000

Contact: Peter Mullins (ATO)

(02) 6216 2805

or Haydn Daw (ATO)

(02) 6216 2031

Mike Buckley (Treasury)

(02) 6263 4413