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Edited version of private advice
Authorisation Number: 1051853064268
Date of advice: 17 June 2021
Ruling
Subject: Income tax - trusts
Question
Does Capital Gains Tax (CGT) event E1 or E2 occur when additional shareholders are added to the trustee company?
Answer
No. Adding additional shareholders to the trustee company will not cause the existing trust to terminate; nor will it lead to a particular asset being settled on terms of a different trust. In addition, the variation will not result in a change of ownership of any of the trust assets and as such CGT event E1 or E2 will not occur. This change will not cause a resettlement of the trust.
This ruling applies for the following periods:
Year ended DD MM YYYY
Year ending DD MM YYYY
The scheme commences on:
DD MM YYYY
Relevant facts and circumstances
You are a discretionary family trust (Trust X).
Company Y is the trustee company for Trust X.
Trust X owns shares in Company B.
Company Y consists of two shareholders.
Trust X intend add additional shareholders to Company Y.
Trust X has operated at a loss for the past X years and there has been no income or capital distributions.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-55
Income Tax Assessment Act 1997 section 104-60