(1)   Is the department or the Australian Taxation Office currently undertaking any review of trusts; if so, what is the nature and timing of the review.

(2)   Is the Minister planning any changes to trust taxation law in the current term of government.

(1)   On 16 December 2010, the Government announced that it will conduct a public consultation process as the first step towards updating the trust income tax provisions in Division 6 of Part III of the Income Tax Assessment Act 1936 (ITAA 1936) and rewriting them into the Income Tax Assessment Act 1997. In developing an initial consultation paper for release in the first part of 2011, Treasury will draw heavily on the expertise of the private sector, particularly through the established Tax Design Panel process and the Board of Taxation. The options to be canvassed in public consultation will be developed within the broad policy framework currently applying to the taxation of trust income. This framework does not include the taxation of trusts as companies.

(2)   The Government is aware that there are a number of issues with the current operation of Division 6 of Part III of the ITAA 1936. On 16 December 2010, the Government announced that it will consider whether there are any issues with the taxation of trusts that must be addressed in this current tax year, based on advice sought from the Board of Taxation. In addition, the Government announced that it plans to introduce amendments before 30 June 2011 so that beneficiaries can continue to use the primary production averaging and farm management deposits provisions in a loss year. Although these amendments for primary producers will affect trusts, they will not amend the trust income tax provisions in Division 6 of Part III of the ITAA 1936. The Government considers that it is important to update and rewrite the trust income tax provisions to give more certainty to the many thousands of small businesses and farmers who use trusts. The Government will make the changes that it considers necessary to achieve this outcome.