| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012672541330
Ruling
Subject: Trust Deed
Question
Will the proposed Deed of Acknowledgement and Amendment give rise to capital gains tax (CGT) events E1 or E2 under sections 104-55 or 104-60 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No
This ruling applies for the following period
Year ended 30 June 2015
The scheme commences on
1 July 2014
Relevant facts
The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:
• your application for private ruling
The trust was established many years ago.
Later, in order for it to comply with the changes to the rules brought in by the Superannuation Industry (Supervision) Act 1993 a further Trust Deed was executed.
As a result of an apparent drafting omission or error on the part of the person preparing the trust deed, the definition of the term Beneficiary was omitted from the Trust Deed.
You have prepared a Deed of Acknowledgment and Amendment to rectify the apparent omission.
Clause xx of the Trust Deed states
Who may amend
The Founder or the Trustee subject to the approval of the Founder may at any time amend, add to, vary or rescind any of the provisions of the Deed (including this clause) ("the Amendment") subject to the provisions of this clause and the compliance with the Act.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 104-55
Income Tax Assessment Act 1997 - Section 104-60
Reasons for decision
CGT event E1 is triggered when a trust resettlement occurs, that is, when one trust estate has ended and another has replaced it.
Taxation Determination TD 2012/21 Income tax: does CGT event E1 or E2 in sections 104-55 or 104-60 of the Income Tax Assessment Act 1997 happen if the terms of a trust are changed pursuant to a valid exercise of a power contained within the trust's constituent document, or varied with the approval of a relevant court? sets out the Commissioner's view in respect to trust resettlements and whether or not a resettlement has occurred.
TD 2012/21 asserts that a valid amendment to a trust will not result in the termination of a trust as long as:
• the amendment is made pursuant to an existing power;
• the amendment does not cause the trust to terminate for trust law purposes; and
• 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, the proposed variations to the existing Trust deed would be a valid amendment to the trust, not resulting in a termination of the trust, and will not result in the happening of CGT event E1 or E2.
There are no other CGT consequences relating to the variation of the trust deed, however, we have not considered any CGT consequences that may arise from the disposal of any CGT asset of the trust as a result of these changes.