Basically yes. It is not essential that the income derived from assets in a testamentary trust be the same assets that the deceased owned at the time of death.
The case to note is The Trustee for the Estate of the late A W Furse No 5 Will v FCT.
The income of a testamentary trust continues to qualify as excepted trust income even though:
- The original assets have altered.
- Proceeds have been reinvested into other assets within the trust.
- The trustee borrows to make additional investments within the trust.
For example if you had a testamentary trust with a parcel of shares worth $300,000 and you sold these shares, borrowed an additional $300,000 to purchase a $600,000 investment property the trust will still be considered a testamentary trust. Please refer to Section 102 AG (2) (a) 1936 Income Tax Assessment Act.
Tax Benefits of a testamentary trust.
If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com
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