Trust Consultation Sub-group minutes, October 2011

2. Novation issue

The issue is about the tax consequences arising from the novation of a contract upon a change of trustee. Novation raises potential CGT event C2 as well as TOFA balancing adjustment issues despite there being no economic gain or loss.

Members expressed different views about the legal effect of a novation consequent upon a change of trustee, in particular noting that the effect would depend on the precise arrangement entered into. Members noted that the effect of provisions such as section 9 of the Trustee Act 1925 (NSW) would also need to be considered.

In order for the ATO to provide a more definitive view upon the issue, it was agreed that members would provide more analysis and example arrangements.

Action item	2.1 October 2011
Description	Members to provide analysis about the effect of a novation and sample novation agreements.
Responsibility	Members
Due date	No date

Sections within Agenda items

• 1. Welcome and introduction
• 2. Novation issue
• 3. Amendments to PS LA 2000/2 foreshadowed in Colonial Decision Impact Statement
• 4. Member issues
• 5. ATO approach to consultation on ATO IDs and withdrawal of public rulings
• 6. Update on broad review of Division 6
• 7. Clark Decision Impact Statement
• 8. Finalisation of TR 2004/D25
• 9. Tax related liability - change of trustee
• 10. Compliance initiatives
• 11. Meeting close