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Edited version of your written advice
Authorisation Number: 1012715611284
Ruling
Subject: CGT - Trust resettlement
Question 1
Will the changes to the trust proposed by the amending deed amount to a CGT event E1 or E2, causing a resettlement of the trust to occur?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commences on:
1 July 2014
Relevant facts and circumstances
The Trustee and the unit holder executed a unit trust deed establishing the unit trust deed.
The trustee and the unit holder wish to amend the unit trust deed in order to satisfy the criteria of a fixed trust, under section 3A(3B) of the Land Tax Management Act NSW 1956.
No assets are being transferred, and you have received confirmation by private ruling from the Office of State Revenue that no stamp duty is payable on the proposed amendments.
The trustee has the power to make such proposed amendments and will be exercising their power.
The proposed amendments do not cause the existing trust to terminate, as nothing affects the assets of the trust, nor will it cause a new trust to arise.
Relevant legislative provisions
Income Tax Assessment Act 1997 (ITAA 1997) section 104-55
Income Tax Assessment Act 1997 (ITAA 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.
CGT event E2 occurs where a CGT asset is transferred to an existing trust.
Tax Determination TD 2012/21 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.