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Edited version of private advice
Authorisation Number: 1051526600389
Date of advice: 10 June 2019
Ruling
Subject: Capital Gains Tax
Question
Will the transfer of the property held on Trust under the deed of agreement to the beneficiary upon the vesting of the trust result in a capital gains tax (CGT) event?
Answer
No.
A beneficiary that is absolutely entitled to a CGT asset as against the trustee will be the relevant taxpayer if a CGT event happens to the asset. This is the effect of section 106-50 of the ITAA 1997 which provides that an act done by a trustee in relation to an asset is taken to have been done by a beneficiary that is absolutely entitled to the asset. As the beneficiary is absolutely entitled against the trustee to the assets of the trust, no CGT event will occur when the trust vests and subsequently transfers the property to the beneficiary.
This ruling applies for the following periods:
Financial year ending 30 June 20XX
Financial year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The trust acquired a property after September 1985 which it held for the benefit of a beneficiary.
The trust will vest in the 20XX financial year and the property will be transferred to the beneficiary.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 104-55
Income Tax Assessment Act 1997 section 104-60