Technical Update:

Stapled trust arrangements – Re-characterisation of trading income

16 February 2017

Lance Cunningham, National Tax Director |

The Australian Taxation Office (ATO) has issued Taxpayer Alert TA 2017/1 which highlights certain stapled trust arrangements that the ATO considers could have the potential to recharacterise trading income into more favourably taxed passive income. A stapled trust arrangement is generally one where the shareholder in a company, or other entity, must also hold units in a trust (there are also other variants). These types of structures are commonly used for managed property and agricultural investments, but could also apply to a number of other arrangements.