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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012281180889

Ruling

Subject: Capital Gains Tax Implications for Trusts

Question

Will the extension of the vesting date of the Trust by the proposed amendments trigger the happening of CGT event E1?

Answer:

No

This ruling applies for the following period

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 June 1970

Relevant facts and circumstances

The Trust was established in the 1970's.

The Trust Deed allows for the Vesting Day to be extended as long as the Guardian consents.

The Guardian has consented to the extension of the Vesting Day.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-55

Reasons for decision

A trust resettlement will occur for income tax purposes where one trust estate has ended and another has replaced it. The effect of such a resettlement is that a disposal of the trust assets is deemed to occur. In consequence, capital gains could accrue to beneficiaries as a result of various CGT events.

Tax Determination TD 2012/D4 sets out the Commissioner's view in respect to trust resettlements and whether or not a resettlement has occurred.

TD 2012/D4 asserts that a valid amendment to a trust will not result in the termination of a trust as long as:

If these conditions are met CGT event E1 in section 104-55 of the Income Tax Assessment Act 1997 (ITAA 1997) will happen.

In your case, as the Trustee is acting within their powers and in line with the conditions declared in TD 2012/D4 CGT event E1 does not arise in relation to the extension of the Vesting Day.


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