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Edited version of private advice
Authorisation Number: 1051963323592
Date of advice: 21 March 2022
Ruling
Subject: Trust resettlement
Question
Will the proposed amendments to the Trust Deed cause capital gains tax (CGT) event E1 or E2 in section 104-55 or section 104-60 of the Income Tax Assessment Act 1997 (ITAA 1997) to occur?
Answer
No, the proposed amendments to the Trust Deed will not cause CGT event E1 or E2 in section 104-55 or section 104-60 of the ITAA 1997to occur.
This ruling applies for the following period:
1 July 20XX to 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust was established by Trust Deed on X Month 19XX.
The Trust Deed provides that;
• specified beneficiaries of the Trust in the Schedule are Person A and Person B
• general beneficiaries of the Trust in the Schedule are Person C and Person D.
• clause 1 paragraphs (1) to (8) make further provisions about beneficiaries extending the general beneficiaries to include;
the specified beneficiaries are general beneficiaries
an extensive list of family members (such as; grandparents uncles aunts brothers sisters spouses widows widowers children and grandchildren of the beneficiaries and the spouses widows widowers children and grandchildren of brothers and sisters spouses children and grandchildren and the parents and grandparents of any spouses uncles and aunts) along with further blood relatives as the Trustee may decide.
Australian corporations, trusts and charities
the Trustee may exclude a person from being a general beneficiary provided it is made in writing and subject to clause 10.
The proposed Deed of Variation has not yet been executed but is to be made in accordance the Trust Deed which provides powers for the Trustee to make changes including to exclude beneficiaries.
The proposed variation is to amend the Trust Deed to;
• update the name Person A
• remove Person A and leave Person B as the specified beneficiary
• make Person A, as well as any spouse or lineal decedents of Person A and lineal decedents of any spouse of Person A all excluded beneficiaries
• place limitations on access by beneficiaries to communications and documentation that the Trustee has relied on.
There have been prior variations made to the Trust Deed previously on X Month 20XX and X Month 20XX in relation to;
• providing for guardian and settlor succession
• updating the definition of net income and how the Trustee deals with the net income.
Relevant legislative provisions
Sections 104-55, 104-60, 149-10, 149-15 and 149-30 of the ITAA 1997.
Sections 160ZZS and 82KXC(1) of the Income Tax Assessment Act 1936
Section 357-60 of Schedule 1 to the Taxation Administration Act 1953.