The forgotten CGT events: Are asset revaluation reserve distributions by trustees of discretionary trusts capital gains?

It is the present practice that asset revaluation reserve distributions by trustees of discretionary trusts are not taxed in Australia. Are such distributions not meant to be taxed, or have relevant sections in the Income Tax Assessment Acts been overlooked? This article will review how trustees of discretionary trusts perform asset revaluation reserve distributions. It then challenges the current accepted view that they can be distributed tax-free to discretionary beneficiaries by analysing relevant CGT events, which the authors regard as forgotten events. It will be submitted that a discretionary beneficiary in receipt of an asset revaluation reserve distribution may have a capital gain which is required to be included in its assessable income. This liability for tax is regardless of the government's recent introduction of s 109XA to address the practice of asset revaluation reserve distributions bypassing the operation of Div 7A of the ITAA 1936 with such distributions.

Returns from investing in Australian equity superannuation funds, 1991-1999

In this analysis of investment manager performance, two questions are addressed. First, do managers that actively trade stocks create value for investors? Second, can the multifactor model of Gruber capture the cross-section of average fund returns for the Australian setting? The answers from this study are as follows: as an industry, investment managers destroyed value for superannuation investors for the period 1991 through 1999, under-performing passive portfolio returns by 2.80-4.00 per cent per annum on a risk-unadjusted basis and 0.50-0.93 per cent per annum on a risk-adjusted basis. Evidence is provided in support of the four-factor model of Gruber; however, the model fails to capture the impact of investment style for the Australian setting. The findings suggest that Australian superannuation investors would transform their retirement savings into retirement income more efficiently through the use of passive alternatives to the stock selection problem.

Rehabilitating the common intention trust

Position of the common intention principle in Australia - the principle should continue to exist - evidentiary difficulties means that the principle is infrequently invoked - claimants who cannot produce sufficient evidence of a common intention may be entitled to relief via equitable estoppel or the joint endeavour principle - the doctrinal foundation of the common intention trust - alternative rationales for the common intention trust.

The relationship between exchange rate exposure, currency risk management and performance of international equity funds

This paper assesses the currency risk management policies for a sample of Australian international equity trusts. The relevance of currency risk management is considered in the context of exchange rate exposure and performance measures. The study incorporates differing economic climates and particular emphasis is given to the Asian crisis in mid-1997. Our results indicate that a good proportion of funds do implement specific currency risk management policies. Furthermore, we find that for those funds managing currency risk, there is some evidence of a favourable impact on currency exposure and fund performance.

The costs of caring for patients in a tertiary referral Australian intensive care unit

We determined the direct cost of an Intensive Care Unit (ICU) bed in a tertiary referral Australian ICU and the cost drivers thereof, by retrospectively analysing a number of prospectively designed Hospital- and Unit-specific electronic databases. The study period was a financial year, from 1 July 2002 to 30 June 2003. There were 1615 patients occupying 5692 fractional occupied bed days at a total cost of A$15,915,964, with an average length of stay of 3.69 days (range 0.5-77, median 1.06, interquartile range 2.33). The main cost driver not incorporated into this analysis was blood products (paid for centrally). The average costs of an ICU day and total stay per patient were A$2670 and A$9852 respectively. Staff-related charges were 68.76%, with consumables related expenditure making up 19.65%, clinical support services 9.55% and capital equipment 2.04%. Overtime charges and nursing agency staff were 19.4% of staff-related charges (2.9% for agency staff), 3.9% lower than expenditure associated with full-time employment charges, such as pension and leave. The emergency nature of ICU means it is difficult to accurately set a nursing establishment to cater for all admissions and therefore it is hard to decide what is an acceptable percentage difference between agency/overtime costs compared with the costs associated with full-time staff appointments. Consumable expenditure is likely to increase the most with new innovation and therapies. Using protocol driven practices may tighten and control costs incurred in ICU.

Health investment, saving, and public policy

This paper develops an overlapping-generations model in which agents invest in health to prolong life in both working and retirement periods. It explores how unfunded social security with or without health subsidies affects life expectancy, economic growth, and welfare. In particular, by extending life at a possible cost of capital accumulation, health subsidies and a pay-as-you-go pension can improve welfare, especially in the short run.