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Edited version of your written advice
Authorisation Number: 1012899829853
Date of advice: 23 October 2015
Ruling
Subject: Trust - variation to a trust deed
Question
Will capital gains tax (CGT) event E1 or E2 occur as a result of the proposed variation to the terms of the Trust?
Answer
No
This ruling applies for the following period:
Year ending 30 June 2016
The scheme commenced on:
1 July 2015
Relevant facts and circumstances
The terms of the Trust gives the power to the trustee to amend the terms of the Trust with the consent of the guardian.
It is proposed to make a variation to the listed beneficiaries under the power contained in the deed.
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 happens if you create a trust over a CGT asset by declaration or settlement (section 104-55 of the Income Tax Assessment Act 1997 (ITAA 1997)). CGT event E2 happens if you transfer a CGT asset to an existing trust (section 104-60 of the ITAA 1997).
Taxation 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 CGT event E1 or E2 occurring provided:
• 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 this 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.