AUSTRALIA Law and Practice Contributed by: William Moore, Frank Hinoporos, Emma Woolley and Todd Bromwich, Hall & Wilcox
2.6 Transfer of Assets: Vehicle and Planning Mechanisms As noted in 1.1 Tax Regimes , Australia does not impose gift or inheritance taxes. Parents can give financial benefits to their children without a “gift tax” applying. Transferring assets is not commonly completely tax- free, but there are planning mechanisms available to help transfer assets to younger generations more tax effectively, such as: • establishing a discretionary trust and having younger generations as beneficiaries of the trust, so that they can receive income and capital and eventually gain control of the trust; • establishing a testamentary trust under a Will, which has tax advantages for beneficiaries, par - ticularly minors; • passing superannuation to tax dependents; and • timing gifts to factor in CGT considerations (see 2.5 Transfer of Property ). 2.7 Transfer of Assets: Digital Assets Digital accounts (such as social media, email, online banking, gaming, subscription services and cloud storage) allow users to access and manage digital assets, including intellectual property, domain names, code, cryptocurrency and shares, digital photos, eBooks, music, online businesses, NFTs, documents and health records, and personal financial content stored on government department systems. There is no specific legislation in Australia covering digital assets in succession, and terms of service vary widely between platforms. Without clear plan - ning, access to digital accounts and assets can be blocked, causing distress, disputes and financial loss. Tips for addressing digital wealth as part of succes - sion planning in Australia include the following. • Storage: determine where the digital wealth is stored (locally or in the cloud) to help decide whether to gift the device and/or account details. • Inventory: create a secure, up-to-date list of digital assets and accounts, including log-in details and passwords. This should not be set out in a Will
(which becomes a public document) but stored securely, such as in a home safe or using an online password manager. • Secure third parties: for valuable digital assets such as cryptocurrency, consider third-party pro - viders who can securely store details and release information on death or incapacity. • Update your Will and power of attorney: these doc - uments should include clear definitions of digital assets and digital accounts, and powers allowing executors and attorneys to deal with them. • Review regularly: keep your digital inventory and legal documents current as assets and accounts change. • Understand policies and terms of service: ensure an understanding of the relevant policies and terms of service, to determine what instructions can validly be given. • Leave instructions: provide clear instructions for attorneys or executors regarding wishes for how digital assets are dealt with. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Types of Trusts In Australia, trusts and similar entities are widely used for tax and estate planning, to protect assets, manage succession and optimise tax outcomes. The primary types of trusts included in an estate plan include the following. • Discretionary trusts are often described in Australia as “family trusts”, and provide the trustee with a high degree of discretion in controlling the property held by the trust and the amount of income paid by the trust to the beneficiaries. • Trading trusts are established to hold the prop - erty of a business for the benefit of the business owners, while the trustee company operates the business. • Unit trusts are often used for pooled investments, especially among unrelated parties. Unlike a dis - cretionary trust, income of a unit trust is distributed
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