Private ruling: Trust resettlement
Date of advice: 23 April 2021
Published: July 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: 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 to happen? | A1: 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 Income Tax Assessment Act 1997 to happen.

Relevant facts and circumstances: The Trust is a hybrid trust. The trust deed currently allows the trustee discretion to determine which beneficiaries are entitled to distributions of income on a yearly basis. There is also an option for fixed entitlements to be issued pursuant to the terms of the deed. No fixed entitlements have been issued to date. The proposed Deed of Variation will be made in accordance with the Trust Deed varying the Trust from a Hybrid trust to a Discretionary trust with no option for fixed entitlements. The beneficiaries listed in the trust deed will remain unchanged as will the main assets of the trust. The trust deed has not been amended as of yet with the proposed changes. The proposed changes are a valid exercise of power by the Trustee and included within the Trust deed.

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