On The Principles Of Trust And Tax Law

Trust system divides the management attribute and the benefitattribute of property. This kind of division makes the right in management,use and punishment of the trust property belong to the trustee in the law,and however, the income produced by the trust property does not belongto the trustee but actually the ownership in the beneficiary. The uniquelegal skeleton of the separation in property rights and benefit of the trustsystem proposed the challenge to the traditional tax law. We shouldrevise the present tax law to adapt the trust industry development.Based on the trust conduit theory, the substantive assessment theoryand the tax revenue fair theory, this article proposes two big basicprinciples to establish the trust tax law: no assessment when form shiftingand actual beneficiary assessment. In the aspect whether there is a taxrevenue object, the settler shifted trust property rights to the trustee, butthe trustee has not obtained the economic interest in substantively, whichbelongs to the form shifting and does not produce the assessment objectthat attributes the taxpayer negative tax ability. That suits to "the noassessment when form shifting principle". In the aspect of the tax revenueobject ownership, the income that the trustee manages and punishes doesnot belong to the trustee in essence, and the true person who ownsbeneficial rights is the actual beneficiary. It should tax the actualbeneficiary. That suits to "the actual beneficiary assessment principle".For the need of levy economy and the public welfare goal, there is theexception of "the actual beneficiary assessment principle". When thebeneficiary is unspecific or not yet has or faces the group trust and theaccumulation trust, for the levy economy reason, it often taxes the trustee;in public welfare trust situation, then it does not tax for the public interest.These exceptional situations have not violated "the actual beneficiaryassessment principle". When the beneficiary is specifically and pays thetrust benefit actually, it should deduct the accepted tax amount from theobtained trust benefit of the beneficiary, and establish the mechanism thetax passes the burden.