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Edited version of private advice
Authorisation Number: 1051524855324
Date of advice: 1 June 2019
Ruling
Subject: Trust resettlement
Question
Will an amendment to the beneficiaries in the Trust deed result in a resettlement of the Trust?
Answer
No.
The proposed amendment to the beneficiaries does not change the essential elements of the trust and therefore it is considered to be a variation of a continuing trust. The proposed changes do not result in a trust resettlement and there are no CGT implications. Further information on trusts can be found by searching 'QC 23082' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust was settled on XX/mth/19XX.
A and B are the two shareholders and directors of XYZ.
The Trustee would like to amend the Trust Deed to provide for the inclusion of an additional beneficiary, being XYZ.
Clause 15 of the Trust Deed provides:
The Trustee for the time being may at any time and from time to time by Deed with the consent of the Appointor revoke add to or vary all or any of the provisions of this Trust Deed or any variation alteration or addition made hereto from time to time and may 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 the law against perpetuities is not thereby infringed and so that such new or other trust powers discretions alterations or variations:-
i) May relate to the management control of the Trust Fund or the investment therefore or to the Trustee's powers or discretions in these presents contained;
ii) Shall not be in favour of or for the benefit of the Settlor Appointor or Trustee or any of them or result in any benefit to the Settlor Appointor or Trustee or any of them but shall otherwise be for the benefit or all or any one or more of the General beneficiaries or the next of kin or any of them or the next of kin of the Primary Beneficiary or Primary beneficiaries or any of them;
iii) Shall not affect the beneficial entitlement to any amount set aside for any beneficiary prior to the date of the variation alteration or addition.
A Deed of Variation has been provided which proposes the change to the fifth part of the Schedule to be amended to include an additional paragraph as follows:
· 'Any company in which any of the General Beneficiaries is a director or shareholder, and
· any trust in which any of the General beneficiaries is a beneficiary.'
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-55