Amending Trust Deeds
Tax Laws Amendment Act 2011
The Tax Laws Amendment (2011 Measures No. 5) Act 2011 introduced significant changes to the way trust income is taxed — requiring trust deeds to be updated to take advantage of the income streaming provisions and avoid adverse outcomes under the Bamford regime.
The Bamford amendments and
their impact on trust deeds
The High Court decision in Commissioner of Taxation v Bamford [2010] HCA 10 established that “income of the trust estate” for section 97 purposes means the amount described as trust income in the trust deed — not necessarily the tax net income. This created a mismatch between trust income and tax net income that required urgent deed amendment.
The 2011 legislation addressed this mismatch and also introduced income streaming provisions — allowing specific entitlements to be made to specific income types (capital gains, franked dividends) — with strict conditions on when streaming is effective.
- Deeds that define “income” by reference to accounting concepts may produce unintended tax outcomes after Bamford
- Updating the income definition in the trust deed to align with the post-Bamford position
- Incorporating streaming powers — specific entitlements to CGT amounts and franked dividends
- Section 100A risk — ensuring streaming arrangements do not trigger the anti-avoidance provisions in TR 2022/4
- Trustee resolutions — correctly structured year-end resolutions under the post-2011 regime
- Deeds established before 2010 almost certainly require updating to access the streaming provisions
Key Provisions Introduced by the 2011 Act
What the amendments made possible
Trust deed not updated for the 2011 amendments?
Streaming opportunities may be unavailable. Brief MGS Private through your accountant to assess the position.