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Edited version of private advice
Authorisation Number: 1051954850082
Date of advice: 24 February 2022
Ruling
Subject: CGT - trust
Question
Will the proposed amendments to the Trust Deed cause CGT event E1 or E2 in section 104-55 or section 104-60 of the Income Tax Assessment Act 1997 (ITAA 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 in section 104-55 or section 104-60 of the ITAA 1997 to happen.
This ruling applies for the following period:
Period end 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust is presently structured as a hybrid unit trust.
It is proposed to vary the trust deed pursuant to clause X to delete the provisions concerning the trustee's ability to distribute income and capital in its sole direction to any and all.
Clause 20 states that:
With the prior written approval of the Appointer and not otherwise the Trustee for the time being may at any time and from time to time by resolution (whether oral or in writing) deed or deed poll add to or vary all or any of the trusts, provision, terms and conditions contained in this Deed but so that the law against perpetuities is not in any case thereby infringed and so that any new or other trust, powers, discretions, alterations or variations:
a) Will not be in favour of or for the benefit of any Successor Trustee or the Settlor: and
b) Will not affect the beneficiation entitlement to any amount set aside for any beneficiary prior to the date of the variation, alteration, addition, payment or application.
The trust deed allows for the distribution of income and capital to be made in two different ways; to the unit holders in proportion to the number of units issues or to any and all beneficiaries at the trustee's discretion.
A present there are no issued units in the trust.
It is proposed that Individual A and B would each be issued with units at or around the time of the amendment.
The 'general beneficiaries' and 'remainder beneficiary' will be removed.
When the amendment is made, any distributions made by the trustee would be solely restricted to the unit holders in proportion to the number of units held.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-55
Income Tax Assessment Act 1997 section 104-60