• Nominating a beneficiary as controller of the trust

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    The trustee of a discretionary trust may nominate up to four beneficiaries as being controllers of the trust for an income year in which the trust had a tax loss or no net income and in which the trustee did not make a distribution of income or capital of the trust.

    In such a case, the trust might not have had the funds to make a distribution, which would prevent it from being controlled in that year. The trustee may wish to make the nomination to ensure that a particular CGT asset is treated as an active asset for that year.

    The nomination must be in writing and signed by the trustee and each nominated beneficiary.

    For CGT events happening on or after 27 June 2011, a nominated beneficiary is connected with the trust (and the trust is connected with the nominated beneficiary) for the purposes of the maximum net asset value test, the aggregated turnover test and the active asset test.

    For CGT events happening between the start of the 2007–08 income year and 27 June 2011, a beneficiary nominated as controller of a trust is connected with the trust for the purposes of the active asset test and the aggregated turnover test (as it relates to the passively held asset provisions). Neither the beneficiary nor the trust needs to include the CGT assets of the other in the calculation of the maximum net asset value test.

    For 2006–07 and prior years, a nominated controller was connected with the trust for the purposes of the maximum net asset value test and the active asset test.

      Last modified: 05 Jul 2013QC 28215