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Ruling
Subject: Trust amendment
Question 1:
Will an amendment to the Trust Deed to add an amendment clause to the trust trigger CGT event E1 in relation to the Trust's CGT assets?
Answer:
No
Question 2:
Will a change to the vesting date of the Trust trigger CGT Event E1 in relation to the Trust's CGT Assets?
Answer:
No
This ruling applies for the following period:
Year Ending 30 June 2012
Year Ending 30 June 2013
Year Ending 30 June 2014
Year Ending 30 June 2015
The scheme commenced on:
01 July 2011
Relevant facts and circumstances
You propose to amend the trust deed.
The amendment will be made pursuant to an existing power.
Relevant legislative provisions:
Income Tax Assessment Act 1997 section 104-55
Reasons for decision
CGT event E1 in section 104-55 of the Income Tax Assessment Act 1997 (ITAA 1997) happens when a trust is resettled, that is, when 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 and consequently, a capital gain may arise to the trustee or beneficiaries of the trust.
Draft Tax Determination TD 2012/D4 sets out the Commissioner's view in respect to trust resettlements and whether or not a resettlement has occurred.
A valid amendment to a trust will not result in the termination of a trust providing:
· the amendment is made pursuant to an existing power
· the amendment does not cause the trust to terminate for trust law purposes
· the effect of the amendment does not lead to a particular asset being subject to a separate charter of rights and obligations such as to give rise to the conclusion that that asset has been settled on terms of a different trust.
In your case it is accepted the above requirements are met and CGT event E1 will not occur in respect of the proposed amendments.