• nTaxpayers should review trust deeds to determinenhow trust income is defined. This may have an impact on the trustee’s taxnplanning.
• nTrustees should consider whether a family trustnelection (an FTE) is required to ensure that any losses or bad debts incurrednby the trust will be deductible and that franking credits will be available tonbeneficiaries.
• nTaxpayers should avoid retaining income in antrust because it may be taxed in the hands of the trustee at the top marginalntax rate.
nImportant: Clients should not act solely on the basis of the material contained in Update. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This update is issued as a helpful guide to clients and for their private information.