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Trusts – tax consequences of trust splitting

There are tax consequences to trust splitting arrangements.

Last updated 17 December 2019

Trust splitting is a common term for an arrangement where separate trustees are appointed over different assets of an existing discretionary trust.

Each trustee is typically controlled by a different party.

The intention of trust splitting is to produce a structure where each trustee is able to deal with the assets it holds independently of the other trustees. In particular, the trustee is able to deal with the assets largely for the benefit of the controlling party.

We have released a Taxation Determination that expresses the ATO view that a trust split of the type described in the Determination will have CGT consequences.

See also:

  • Taxation Determination TD 2019/14 Income tax: will a trust split arrangement of the type described in this Determination cause a new trust to be settled over some but not all assets of the original trust with the result that CGT event E1 in subsection 104-55(1) of the Income Tax Assessment Act 1997 happens?
  • Trusts