Private ruling: CGT consequences of the proposed trust deed amendment.
Date of advice: 9 March 2020
Published: April 2020
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the proposed trust deed amendment cause a CGT event 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. Provided the special consent of the Unit Holders is obtained, the proposed amendments are within the powers of the Trustee to amend as contained in the Deed. Therefore the amendment will not cause a CGT event E1 or E2 in section 104-55 or 104-60 of the Income Tax Assessment Act 1997 to happen. Also, no other CGT event is considered to happen. The decision is consistent with the view expressed in Taxation Determination TD 2012/21 Income tax: does CGT event E1 or E2 in sections 104-55 or 104-60 of the Income Tax Assessment Act 1997 happen if the terms of a trust are changed pursuant to a valid exercise of a power contained within the trust's constituent document, or varied with the approval of a relevant court?

Relevant facts and circumstances: The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are copies of: (1) The Trust Deed (2) The proposed Amendment Deed The Trust is a unit trust established by deed (the Deed) dated XX/XX/XXXX, with X initial unit holders, each holding X units. The proposed amendments ensures there are only ordinary units to be issued in this trust with present entitlement to income and to capital of the Trust Fund in order to bring the trust within the definition of a fixed trust for the purposes of section 3A(3B) of the Land Tax Management Act . Clause X.X of the Deed sets out the powers of the trustee to vary the trust with special consent of the unit holders, provided: • the rule against perpetuities is not infringed • the beneficial entitlement to any amount set aside for any unit holders prior to the date of the amendment is not affected • the amendment does not result in a benefit to the Trustee other than in its capacity as a Unit Holder where applicable.

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