Private ruling: Trust resettlement - CGT event E1 or E2
Date of advice: 9 July 2019
Published: September 2019
Ruling period: Year ending 30 June XXX X | Year ending 30 June XXXX | Year ending 30 June XXXX | Year ending 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Will the proposed amendments to the Trust Deed cause CGT event E1 or E2, to happen? | A1: No. It is considered the proposed amendments to the Trust Deed will not cause the Trust to end or give rise to a particular asset of the Trust being settled on terms of a different trust. The proposed amendments are considered within powers of the Trustee to amend as contained in the Deed and therefore, will not cause CGT event E1 or E2 in section 104-55 or 104-60 of the Income Tax Assessment Act 1997 to happen. The decision is consistent with the view expressed in Taxation Determination TD 2012/21.

Relevant facts and circumstances: The Trust was established by Deed a few years ago as a discretionary trust. The Trustee of the Trust is a company controlled by the principals of the Trust. The Settlor of the Trust paid a sum of money to settle the Trust. The Settlor of the Trust established the trust for the benefit of the beneficiaries of the Trust. The primary, secondary, tertiary and default beneficiaries are defined in the Schedule to the Trust Deed. The Trustee has powers to amend the Trust Deed. On the date the Trust was established, the Trust Deed was amended to insert certain clauses intended to make the Trust a unit trust. The Trust acquired a rental property. The Trustee proposed to amend the Trust Deed further so that the Trustee would have less discretionary powers. It is noted, however, despite the proposed further amendments the Trust remains a discretionary trust. There has never been a change of Trustee since the establishment of the Trust up to the date of the ruling application.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-55 | Income Tax Assessment Act 1997 section 104-60