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This edited version has been archived due to the length of time since original publication.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 written advice

Authorisation Number: 1051517641612

Date of advice: 24 May 2019

Ruling

Subject: Capital gains tax-trust resettlement

Question

Does CGT event E1 or E2 in sections 104-55 or 104-60 of the Income Tax Assessment Act 1997 happen if the beneficiaries of the trust are changed?

Answer

No. The variation of the Deed is a valid exercise of the Trustees powers and the change will not cause the existing trust to terminate; nor will it lead to a particular asset being settled on terms of a different trust. It is considered that the variation will not result in a change of ownership of any of the trust assets. As such, the variation of the Deed will not cause CGT event E1 or E2 to happen.

This ruling applies for the following period:

Year ending 30 June 2019

The scheme commences on:

1 July 2018

Relevant facts and circumstances

In 198X a deed of settlement was executed for a Trust.

An entity is the Trustee of the Trust.

The appointer of the Trust is Person A and after their death the Executor or Administrator of the Estate of Person A.

The Vesting day of the Trust is sometime in 206X.

The objects or potential beneficiaries of the Trust include those persons or entities named in the Schedule to the Trust Deed, namely:

    ● At Item A ‘The Specified beneficiaries’ as defined in the Schedule which includes the family members of Person A who are:

    ● Family member A who is a non-resident for tax purposes.

    ● Family member B who is a non-resident for tax purposes.

    ● Family member C who is a non-resident for tax purposes.

    ● At Item B ‘The General beneficiaries’ as defined in the Schedule as:

    ● Person A who is a resident for tax purposes

Clause X of the Trust Deed provides:

    X. THE Trustees for the time being may at any time and from time to time by deed revoke add to or vary all or any of the provisions of this Deed or the Schedule hereto as limited by any variation or alteration or addition made there to from time to time including any beneficial· interests there under and, without limiting the generality of the fore­ going provisions of this clause, may at any time and from time to time by the same or any other deed or deeds declare any.new or other trusts or powers concerning the Trust Fund or any part or parts thereof, but so that any law against perpetuities is not thereby infringed and so that such new or other trusts powers discretions revocations alterations or variations

        (1) shall be invalid to the extent that they purport to operate, or would otherwise operate, in favour of or for the benefit of any one or more of the excluded persons,

    (2) shall not affect the beneficial entitlement to any amount set aside for any

    beneficiary prior to the date of the variation alteration or addition; and save as

    provided in this clause this Deed and the trusts thereof shall not be capable of

    being revoked added to or varied.

The Trustee now wishes to exercise its power under Clause X of the Trust Deed to vary the Trust deed to include the following:

    1 Item A of the Schedule to the Trust Deed by varying item A of the Schedule to the Trust Deed to state the following:

X. Specified Beneficiaries

      The family of Person A other than Family members A, B and C

    2 Item B of the Schedule to the Trust Deed by varying item 6 of the Schedule to the Trust Deed to state the following:

"X. General beneficiaries Nil"

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-55

Income Tax Assessment Act 1997 section 104-60


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