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Edited version of private advice
Authorisation Number: 1051913956347
Date of advice: 25 October 2021
Ruling
Subject:Trust resettlement
Question
Will the proposed amendments to the Trust Deed cause CGT event E1 or E2 under section 104-55 or section 104-60 of the Income Tax Assessment Act 1997 to happen?
Answer
No. The proposed amendments to the Trust Deed will not cause the Trust to terminate or give rise to a particular asset of the Trust being settled on terms of a different trust. The proposed amendments are considered within the powers of the Trustee as contained in the Trust Deed and therefore, will not cause CGT event E1 or E2 under section 104-55 or section 104-60 of the Income Tax Assessment Act 1997 to happen.
This ruling applies for the following period:
Year ended 30 June XXXX
The scheme commences on:
1 July XXXX
Relevant facts and circumstances
A Trust was established by a trust deed with directors and a listed as Guardian of the Trust.
For ease of reporting, administration and operation, efficiency and management, consolidation of funds and transactions between the entities, they want to consolidate the group, with a head company.
The proposed Deed of Variation is to the expand the definition of "General Beneficiaries" will be made pursuant to a valid exercise of a power of Trustee with the consent of the Guardian to make changes to the Trust deed within a clause of the Trust Deed.
The proposed amendments to the Trust Deed were:
• Expanding the class of beneficiaries.
• Retained discretionary power of appointment of income and capital to benefit only members of the tax consolidated group as beneficiaries; and
• Restricting the power to add new beneficiaries to ensure this is limited to members or new members of the tax consolidated group.
It is your view, that the amendments to the Trust Deed do not cause the happening of CGT event as the Trustee will have exercised a valid exercise of power under the Trust Deed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-55
Income Tax Assessment Act 1997 section 104-60