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DISCRETIONARY TRUSTS – RISK OF BENEFICIARY LAIBILITY

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Discretionary trusts are established for the benefit of the "family" so that you may distribute income and capital to a wide class of beneficiaries referred to in the trust deed.  Quite often "beneficiaries" include "brother, sister, spouse...and remoter issues".  What is the risk, for example, if a "brother" who is unaware that he is a beneficiary and received no benefit from the trust, becoming liable?  Could he become liable merely because he happens to be the "brother" of the person who established the trust and otherwise had nothing more to do with the trust?

In the recent decision of Smeaton Trust the NSW government sought payment from one such "brother".  The brother was first informed that he was included in the class of beneficiaries by letter from the Chief Commissioner.  White J had to determine whether the brother was liable when he was merely mentioned in the trust deed as the beneficiary.

It is important that you check:

  • Who are the beneficiaries mentioned in your trust;
  • Whether you have been included in a trust established by your relative without your knowledge;
  • What are the risks given that you may be unaware that you were included in a "class of beneficiaries";
  • What can be done if you were included but do not wish to become liable.
White J deals with a number of issues relating to such a beneficiary.  

NEW POWERS OF ATTORNEYS

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From 1 September 2015 new law applies to Financial and Personal Powers of Attorneys.  There is no longer the need for a separate Power of Attorney Guardianship.  You can now appoint an attorney to make financial and lifestyle choices on your behalf in one document.  There are a number of new requirements such as:

  • Restrictions regarding carers;
  • Disclosure regarding convictions for acts of dishonesty;
  • New Acceptance Statements;
  • Witnessing of Acceptance Statements.
Seek legal advice to ensure compliance with the new requirements.

Superannuation and Tax

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05.08.14

In this issue:

  • New Super changes
  • One word "and" costs $1 million
  • Deceased Estates
  • Family Law
  • Liability of Employers for negligence of employees
  • Contested Wills
  • Rules against Tax avoidance
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Business and related Law

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05.08.14

In this issue:

  • Family Law property division - the High Court has spoken
  • An executor of a deceased estate assumes liability
  • Restrictive covenants
  • 2013 Federal Election
  • Restructuring your business - removing income tax impediments
  • Rules against Tax Avoidance
  • Special rules for private companies
  • What is a supply for GST purposes - The Qantas case
  • Self-managed Super Funds
  • Motor vehicle data matching program
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Property and related Law

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05.08.14

In this issue:

  • Stamp duty parallel arrangements
  • Off the plan vendor disclosure requirements
  • Lending money - can be costly for family members
  • Family law: parental responsibility and meaningful relationships
  • Tax time 2012 - ATO compliance program
  • Superannuation changes
  • Anti-avoidance provisions in flux
  • Director Penalty Regime
  • Employee / contractor tool
  • Taxable payments and reporting - building and construction industry
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Tax Law

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05.08.14

In this issue:

  • We have relocated!
  • Business name register launched
  • Prime Minister and Minister for Mental Health & Ageing announce more choice, easier, access, and better cover for older Australians
  • 30 June is around the corner
  • Tax changes affecting small businesses
  • CGT changes
  • Changes to the timing of trust resolutions
  • Living away from home allowance changes
  • Superannuation changes
  • Self-assessment for indirect taxes
  • Anti-avoidance provisions in state of flux
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Mortgage and Lease

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05.08.14

In this issue:

  • Mortgage no longer a security
  • Family law
  • Consumer credit regime
  • Reverse mortgages
  • Binding financial agreements in jeopardy
  • Landlords beware
  • ATO compliance requirements
  • New tax rates - residents and non-residents
  • Household assistance package
  • Tax offsets
  • Schoolkids bonus
  • Superannuation
  • Are you an employee or contractor?
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Trust and Related Law

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05.08.14

In this issue:

  • Superannuation changes
  • Various changes announced in mid-year economic and fiscal outlook 2011-2012
  • Changes to the taxation treatment of the living-away-from-home allowance
  • Changes to the income tax law affecting consolidated groups
  • Trust reform
  • Changes to the tax treatment of losses
  • GST refunds
  • Recent changes in the law
  • Our successful tax and stamp duty case
Click here to view the article Tax Liability Unlimited by Vijay Kooblal published in the Law Institute of Victoria Journal.

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