Question: Upon review of your Issue 331 newsletter, and other information surrounding the Bamford decision, our firm is looking at the options around whether Family Trust deeds should be updated.

Much of the information surrounding this issue is confusing with different tax lawyers having differing opinions on the importance of both updating the deed & the use of template minutes for FY2010.

In addition, given some of the costs involved in updating these deeds, it may be difficult to get clients to agree to an update. Even though we, as accountants, may understand the importance, getting the message out to the client is a bit more difficult.

Given your expertise in this area, do you have any information that could assist us in making the decision of whether to go down this road of updating clients trust deeds, and if so, how to get the correct info across to our client base so that they agree to the updates?

I note that in this issue you have outlined the costs, being $165 via LawCentral and $1,100 though Brett Davies Lawyers. Please explain why the great variation in cost between these two options. Given the price choice, most clients would go for the cheaper option, so I think it is important that we have an understanding of the benefits of one option over the other to correctly advise clients on this matter.

Answer: These are indeed dark days for the small business world in Australia.

My advice is to stick closely to one law firm. Brett Davies Lawyers carries $15m of PI insurance on every Deed of Variation (whether you do the Deed of Variation at www.lawcentral.com.au or directly from Brett Davies Lawyers).

Many accounting houses are not waiting for their clients to give them the go ahead with the Family Trust update. They are doing the www.lawcentral.com.au update and sending it to their clients with the accountant's bill. If the client doesn't see value in the update then email the Deed back to us for a full refund onto your credit card. This removes all risk. When the client comes back to sue you for not having updated their deed you have an excellent defence.

When you do the update, we give you the ammunition that you need to convince your client to clean up their Family Trust deed. At Brett Davies Lawyers we are concerned that the ATO may unilaterally stop Family Trust updates. So, there isn't time to wait. The amendment can't be done "next year". These issues are usually addressed in the Family Trust update:

1. The general "Streaming provisions"
2. Franking credits
3. Attribution relating to distributing capital gain to beneficiaries
4. The ongoing extension of the Capital Gains Tax regime since 1985
5. Estate Planning - who controls the Family Trust when you die
6. Wealth Transference and Estate Planning issues
7. The majority of Appointors being able to take all the proceeds of the trust over the minority
8. The trustee's ability to indemnify
9. Amending the trust later
10. Asset Preservation
11. Bamford Decision including defining "income", ATO's Decision Impact Statement and Practice Statement PS LA 2010/1
12. Loss Recoupment
13. Ensuring the Small Business Capital Gains Tax concession is available
14. Ensuring there is no resettlement

For our Platinum Members I explain in detail why each above issue is important and how we address them:

Do you operate a business on eBay or Trading Post Australia? The ATO collects data and cross matches that to you. They then check your tax returns to see if you are declaring the correct income.

The ATO is now demanding and collecting information on online traders who sold goods and services over $20,000 in any of the past three financial years. The information is electronically matched with the Tax Office's data holdings. This identifies non-compliance with registration, lodgement and payment obligations under tax law.