(Cavan): I am having some difficulty in seeing the point in these amendments to section 5. The purpose of the subsections as drafted is to provide a measure of relief in the case of certain discretionary trusts by treating the objects of such trusts as being beneficially entitled in possession to the trust funds, rather than treating the trusts themselves as entities.
Subsection (2) deals with discretionary trusts where (1) the sole objects are a child or children of a marriage either with or without his or their parent or parents and (2) a minor child is living on the valuation date. Subsection (2) (c), in the context of such a trust, deals with the situation where, on the valuation date, neither spouse is an object of the trust or both spouses are deceased. In such a case, the trust funds are deemed to be taxable wealth of the minor children of the marriage in equal shares.
Subsection (3) deals with discretionary trusts which exist on a valuation date for the exclusive benefit of one or both parties to a marriage, or one or more named individuals for special reasons; age, incapacity, improvidence, and so on. In such a case, the trust funds are deemed to be taxable wealth of such person, or persons if more than one person, in equal shares. To exclude in equal shares, as suggested, in each of the amendments would render it impossible to pinpoint the beneficial entitlement in possession to the trust property. Legally, neither the individual objects, as such, nor the class of objects as a whole, have any beneficial interest in the property comprised in the discretionary trust.
The subsections as drafted meet this difficulty by deeming the trust funds to be the taxable wealth of the relevant objects of the trust in equal shares. The result is that a share of the trust funds is related to each individual and he then gets the benefit of the appropriate threshold to which as an individual he is entitled. It is arguable that the amendment would have the effect of treating each individual as being entitled to the entire trust fund and, presumably, that is not what is intended.
There is a maxim in equity, equality is equity. The subsections as drafted meet, I submit, this admirable concept in that they should in the majority of cases have the effect of mitigating the tax by dividing the taxable property between the individuals, thus lessening the possibility of any individual reaching the taxable thresholds. If in the trust there is more than one object and no appointment is made, none of the objects have any beneficial interest in it. The reasonable thing is to deem them entitled to it in equal shares.