Private ruling: Trust Deed Amendments
Date of advice: 20 August 2025
Published: 27 October 2025
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will executing the proposed Deed of Variation to convert the Trust to a Fixed Trust give rise to any Capital Gain Tax (CGT) event in Division 104 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. As the Trust Deed will be amended through a valid exercise of the Trustee's power, the amendments will not cause the existing trust to terminate and a new trust to arise, nor will the variation lead to any particular asset being subject to a separate character of rights and obligations, no CGT events will occur, including CGT events E1, E2, E3, E4, E5, E6, E7 or E8. The same trust will hold the same CGT asset after the amendment. It follows that the amendment won't create a trust over the asset by declaration or settlement and won't transfer a CGT asset to another existing trust. This decision is consistent with 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 constitute document, or varied with the approval of a relevant court? Taxation determinates are public rulings for the purposes of the Taxation Administration Act 1953 . If you rely on the ruling and act in accordance with the ruling, you will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Relevant facts and circumstances: The Trustee and the Trust executed a deed (the Trust Deed establishing the Trust. The Trust assets comprise real property. The beneficiaries include the lineal descendants of Individual A and Individual B. The Initial beneficiaries of the Trust include Individual C and Individual D (children of Individual A and B). The Discretionary Trust was varied to a Unit Trust. The Unitholders of the Trust include Individual C and D. The Trustee proposes to amend the Trust Deed in order for the Trust to meet the definition of a fixed unit trust by conversion of a Discretionary Trust to a Fixed Trust for NSW Land Tax purposes, in subsection 3A(3B) of the Land Tax Management Act 1956 (NSW). Clause XX of the Trust Deed provides: Subject as herein provided the Trustee may at any time and from time to time in its absolute discretion (and notwithstanding anything to the contrary herein contained expressed or implied) by Deed or by resolution vary revoke rescind add to delete or otherwise change all or any of the powers and provisions herein declared concerning the trust fund other than Clause X and the vesting date hereinbefore referred to and so that no benefit in respect of the settled fund may be conferred thereby on the Settlor or the Trustee or any person who has been a trustee of the trust fund. IT IS HEREBY EXPRESSLY PROVIDED subject to the limitations aforesaid that the power herein conferred may be exercised by the Trustee in its absolute discretion as it may see fit. All the Unit Holders will approve the variation by signing the deed of variation execution page. The Trustee will amend the Trust Deed by altering and inserting the following definitions: 'Beneficiary or Beneficiaries' with inserting after the words shall mean A Unitholder or two or more Unitholders (as applicable). Insert new definition of 'Accounting Period' means: • Subject only to paragraph (b) of this definition, the period from 1 July to the following 30 June; and • In relation to what would otherwise be the Accounting Period within which the Vesting date occurs, the Accounting Period is the period from the previous 1 July until the Vesting date. 'Initial Unitholders' means: Individual C of State, State, XXXX and Individual D of State, State, XXXX as outlined in the table in clause X(x). 'Market Value' means: The fair market value of the Units determined by a suitable qualified and experienced accountant or valuer (noting that such accountant or valuer may need to engage other suitable qualified valuers in order to determine the market value of particular assets of the Trust Fund in order to determine the market value of the Units in turn) determined in accordance with the following assumptions: • There is a willing buyer and willing seller; • A reasonable period within which to negotiate the sale occurred; • The Units are freely exposed to the market with reasonable publicity; and • No account is taken of the interest of a special buyer. 'Register' means: A register of Unitholders maintained in accordance with clause X. 'Trust' means: The Trust established and governed by this Deed. 'Trust Fund' has the meaning outlined in clause X, noting that the original settled sum of $XX.00 was converted into Unit capital in accordance with clause X(x). 'Unit' means: An undivided part of share of the Trust Fund in accordance with this Deed. The Trustee will amend the Trust Deed by altering the following clauses: Delete clause XX. Insert the following clause heading at clause X: 'X. Exclusion of certain provisions of Trustee Act 1925 (NSW)' Delete clause X and insert the following: X. Trusts of the Trust Fund • The Trustee shall hold the income and capital of the Trust Fund UPON TRUST for the Unitholders for that part of the Accounting Period the Units are held in proportion to the number of Units held by them; • The Unitholders are presently entitled to the income of the Trust Fund, subject only to payment of proper expenses by and of the Trustee relating to the administration of the Trust Fund and are presently entitled to the capital of the Trust Fund, in proportion to the total number of Units on issue; and • The Trustee shall at the request of a Unitholder pay, apply, or otherwise deal with the share of the income of the Trust Fund to which such Unitholder is entitled in such manner as such Unitholder may from time to time direct. Delete clause X and insert the following: X. Period and determination of Trust • Upon termination of the trusts herein declared the investments of the Trust Fund shall be realised and the proceeds of and other available cash shall be distributed among the Unitholders in accordance with this Deed. The proportion of trust capital to which a Unitholder is entitled on a wining up or surrender of Units is fixed to the same proportion of income of the Trust Fund to which the Unitholder is entitled; and • The Trust Fund is terminated on the Vesting date. Delete clause X and insert the following: X. Units • The beneficial interest in the Trust Fund is divided into Units; • Only X class of Units can be on issue and each Unit confers a pro rata entitlements to the income and capital of the Trust Fund; • At any time each of the Units are of equal value; • The Original settled sum (being $XX.00) is converted into Unit capital and the Initial Unitholders respectively are issued Units in accordance with the following table: Table 1: Original settled sum Unitholder Number of Units Unit capital per Unit Percentage of Units Individual C XX $X.00 XX% Individual D XX $X.00 XX% • In the case of the creation of any additional Units such additional Units shall only be entitled to share in any income of the Trust Fund from the date of creation of such Unit. Delete clause X and insert the following: X. Issue of Units • The Trustee may issue additional Units from time to time in such manner as the Trustee thinks fit subject always to the Units being issued at Market Value; • For the avoidance of doubt, all Units must be issued at Market Value; • Unless all Unitholders waive the operation of this clause: ­ Each issue of new Units will be offered in the first instance to existing Unitholders on a pro rata basis or as near as possible in the circumstances; ­ Offers of new Units will be made by notice in writing (Offer) to the Unitholders stating: o The number of Units offered; o The time within which the Offer, if not accepted, will be deemed to be declined, and After the expiration of that time, or upon communication to the Trustee from a person to whom the Offer is made that they decline to accept the Units offered, the Trustee may dispose of those Units in such manner as it thinks most beneficial to the Trust Fund; • If the new Units cannot, because of their number, be offered precisely pro rata, the Trustee must offer as many of them as possible pro rata and may offer the rest to one or more Unitholders as the Trustee thinks fit; and • The Trustee may require any new Unitholder to sign an application for Units in any form acceptable to the Trustee./p> Delete clause X and insert the following: X. Redemption of Units • The Trustee must, at the written request of a Unitholder (exiting Unitholder) redeem and cancel all or any of the Units held by the Exiting Unitholder, on such terms and conditions as the Exiting Unitholder requests, subject always to the condition that the Units must be redeemed at Market Value; • For the avoidance of doubt, all Units must be redeemed at Market Value; and • For the avoidance of doubt, upon the Trustee obtaining a written request from an Existing Unitholder as provided for in clause X(x), the Trustee must redeem and cancel the number of Units requested by the Exiting Unitholder, with the redemption occurring at Market Value. • Insert the following clause heading at clause X: XX. Powers of the Trustee Re-numbering it as new clause XX; and Insert the following new clause X: X. Unit transfer and transmission • A Unitholder may transfer all or some of their Units to another person or entity (Transferee) in accordance with the terms of this Deed; • Any transfer of Units must be made using a written transfer form approved by the Trustee. The transfer form must be signed by both the Unitholder (Transferor) and the Transferee; • The completed and signed transfer form, along with the original Unit Certificate (if one has been issued), must be lodged with the Trustee; • Upon receiving a valid and properly completed transfer form, and being satisfied that all conditions for transfer have been met (including payment of any stamp duty or other taxes), the Trustee must: ­ Register the Transferee as the new Unitholder on the Register; ­ Cancel the Transferor's Unit Certificate (if applicable) and issue a new Unit Certificate to the Transferee for the transferred Units (if Unit Certificates are issued by the Trust); and ­ Notify the Transferor that the transfer has been entered on the Register; • A transfer of Units takes effect on the date the Transferee's name is entered into the Register by the Trustee; • The Trustee may refuse to register a transfer of Units if: ­ The transfer form is not properly completed or executed; ­ Any required consents or approvals (as may be specified elsewhere in this Deed or by law) have not been obtained; ­ The transfer would result in a breach of any law or regulation; or ­ The transfer would, in the reasonable opinion of the Trustee, be detrimental to the Trust or the other Unitholders; • The Trustee is not required to give reasons for refusing to register a transfer of Units, except where required by law; • Once a transfer is registered, the Transferee becomes the Unitholder of the transferred Units and is entitled to all the rights and obligations attaching to those Units from the effective date of transfer; • Any stamp duty or other taxes payable on the transfer of Units are the responsibility of the Transferee, unless otherwise agreed in writing by the Transferor and Transferee, The Trustee may require evidence of payment of such duties or taxes before registering the transfer; • The Transferor indemnifies the Trustee against any loss, cost, expense, or liability incurred by the Trustee arising from or in connection with any invalid or irregular transfer of Units where the Trustee has acted in good faith; • If a Unitholder dies, becomes bankrupt, or a liquidator, administrator, or similar official is appointed to a corporate Unitholder, the Trustee shall recognise only the legal personal representative, trustee in bankruptcy, liquidator, administrator, or other duly appointed official (as the case may be) as having title to the Units registered in the name of that Unitholder; • The person claiming title to Units by transmission under clause X(x) must provide to the Trustee such evidence of their entitlement as the Trustee may reasonably require, which may include (but is not limited to): ­ In the case of death: a certified copy of the grant of probate or letters of administration; ­ In the case of bankruptcy: a certified copy of the order of sequestration or appointment of trustee in bankruptcy; and ­ In the case of a corporate Unitholder: a certified copy of the order for winding up, appointment of liquidator, or administrator; • Upon receipt of satisfactory evidence under clause X(x), the Trustee must register the person claiming title by transmission as the holder of the Units; • Notwithstanding clause X(x), the Trustee may decline to register the transmission of Units if: ­ The Trustee has a lien or charge over the Units; or ­ The registration would contravene any provision of this Deed or any applicable law; • A person registered as a Unitholder by transmission shall hold the Units subject to the same terms and conditions as those upon which the deceased, bankrupt, or corporate Unitholder (as the case may be) held them immediately prior to the event of transmission; • Until such time as a person is registered as a Unit Holder by transmission, they shall have the same rights to distributions and other benefits (if any) as the Unit Holder would have had, but shall not be entitled to exercise any voting rights (if any) in respect of the Units, nor to receive notices from the Trustee unless they request to do so in writing; and • Any person registered as a Unitholder by transmission indemnifies the Trustee against all claims, demands, actions, costs, and expenses which the Trustee may incur by reason of having registered such person as a Unitholder in reliance on the evidence provided under clause X(x). Insert the following clause heading at clause X: 'XX. Appointment of Trustee' and re-number it as clause XX. Insert the following new clause X: X. Register of Unitholders • The Trustee must establish and maintain a Register at the Trust's principal office or at such other place as the Trustee determines; • The Register must contain the following information for each Unitholder: ­ Their full name; ­ Their current address; ­ The number of Units held by them; ­ The date on which they became a Unitholder; ­ The date on which they ceased to be a Unitholder (if applicable); and ­ Any other information the Trustee considers necessary or is required by law; • Each Unitholder must promptly notify the Trustee in writing of any change to their name or address so that the Register can be kept accurate and up-to-date; • The Register is conclusive evidence of who is a Unitholder and the number of Units held by them, unless a manifest error is proven; • A Unitholder or their authorised representative may inspect the Register during normal business hours, upon giving reasonable prior notice to the Trustee; • The Trustee may set reasonable conditions for inspection, including requiring the inspection to take place at the Trust's principal office; • The Trustee may charge a reasonable fee for providing a copy of the Register or any part of it; and • The Trustee must keep the information in the Register confidential and use it only for purposes related to the administration of the Trust and as permitted by law. The Trustee must comply with all applicable privacy laws regarding the collection, use and disclosure of personal information in the Register. At clause XX by inserting the following clause heading: 'XX. Amendment of Deed.' Inserting in the first line after the words, 'Subject as herein provided' by inserting a comma immediately thereafter followed by the words, 'the overriding provisions of clause XX and with the unanimous written consent of the Unitholders, the'; and Re-number it as new clause XX. Insert the following clause heading at clause XX. 'XX. Role, liability and indemnity of Trustee'; and Re-number it as new clause XX. Inserting a new clause XX: XX General Meetings • General Meetings of Unitholders may be called to discuss matters relating to the Trust and to pass resolutions, where required or permitted by this Deed or by law; • The Trustee may call a General Meeting of Unitholders at any time; • The trustee must call a General Meeting if requested in writing by Unitholders who together hold at least XX% of the total Units in the Trust. The request must state the purpose of the meeting; • At least XX days' written notice must be given for any General Meeting, unless a shorter period is agreed to by Unitholders holding at least XX% of the total Units. The notice must specify the date, time, and place of the meeting, and clearly state the general nature of the business to be conducted. Accidental omission to give notice to or non-receipt of notice by, any Unitholder does not invalidate the proceedings at any meeting; • No business may be transacted at a General Meeting unless a quorum is present; • A quorum consists of at least two Unitholders, or their proxies, who together hold at least XX% of the total Units in the Trust; • If a quorum is not present within XX minutes after the scheduled start time of the meeting, the meeting will be adjourned to the same day, time, and place in the following week, or to such other date, time, and place as the Chairperson determines. If a quorum is still not present at the adjourned meeting within XX minutes, the meeting will be dissolved, unless the Unitholders present (regardless of number) agree to proceed; • The Trustee (or a representative nominated by the Trustee) will chair any General Meeting. If the Trustee is not present or declines to act as Chairperson, the Unitholders present may elect one of their number to chair the meeting; • Each Unitholder has one vote for every Unit they hold; • Resolutions are generally passed by an 'ordinary Resolution' meaning a simple majority (more than XX%) of the votes cast by Unitholders present and voting; • Certain important matters, as specified in this Deed or as agreed by Unitholders by Ordinary Resolution from time to time, may require a 'Special Resolution', which means at least XX% of the votes cast by Unitholders present and voting; • Voting may be by a show of hands or by a poll, if requested by the Chairperson or by Unitholders holding at least XX% of the Units present. On a poll, each Unitholder has one vote for each Unit held; • A Unitholder may appoint another person as their proxy to attend and vote on their behalf at a General Meeting. The appointment of a proxy must be in writing, signed by the Unitholder, and lodged with the Trustee at least XX hours before the meeting; • The Trustee must cause proper minutes of all General Meetings to be kept. These minutes, once confirmed and signed by the Chairperson, are conclusive evidence of the proceedings; • The Chairperson may, with the consent of any meeting at which a quorum is present, adjourn the meeting from time to time and from place to place. Only the business left unfinished at the original meeting may be conducted at an adjourned meeting; • Notwithstanding the above, a resolution signed by all Unitholders who would be entitled to vote on the resolution at a General Meeting is a valid and effective as if it had been passed at a duly convened and held General Meeting (Written Resolution); • The Written Resolution may be contained in one document or in several identical documents, each signed by one or more Unitholders. Electronic signatures are permitted if legally valid; • A written Resolution is passed on the date the last Unitholder signs the resolution; and • In relation to a deadlock, being a situation where the Unitholders are unable to reach agreement on any matter requiring approval by Unitholders (whether by Ordinary Resolution or Special Resolution as applicable), after at least X attempts to resolve the matter at properly convened General Meetings: ­ Any Unitholder (Initiating Unitholder) may give written notice to the other Unitholder(s) (Recipient Unitholder) describing the matter in dispute and stating that a deadlock has occurred (Deadlock Notice); ­ Upon receipt of a Deadlock Notice, the Unitholders must promptly meet in good faith and use all reasonable endeavours to resolve the deadlock within XX days; ­ If the deadlock is not resolved within XX days of the Deadlock Notice, the matter must be referred to mediation at the Sydney Mediation Centre or, if the XX Mediation Centre or any successor to that organisation is no longer operating, a similar organisation operating in the state. The mediation must be held in the state, and the mediator's costs must be shared equally by the Unitholders; and ­ If the deadlock is not resolved through mediation, then the deadlock remains, however, nothing then prevents any Unitholder from pursue any legal rights or taking any legal course of action available in the circumstances. Inserting a new clause XX as follows: XX. Unitholders bound by Deed All Unitholders shall be entitled to the benefit of and shall be bound by the terms and conditions of this Deed as amended varied or supplemented from time to time. Inserting a new clause XX as follows: XX. Liability of Unitholders limited Notwithstanding any other provision of this Deed or any provision deemed to be included herein and whether on the termination of the Trust or otherwise, no Unitholder shall, by reason hereof or by reason of any relationship hereby created, be under any obligation personally to indemnify the Trustee or any creditor of the Trustee in the event of there being any deficiency of the assets of the Trust Fund as compared with the liabilities of the Trustee in relation thereto. Inserting a new clause XX as follows: XX. Overriding provisions (fixed trust for NSW land tax purposes) Notwithstanding any other provision in this Deed (whether before or after this clause XX), the Unitholders of the Trust: • Are presently entitled to the income of the Trust, subject only to payment of proper expenses by and of the Trustee relating to the administration of the Trust; and • Are presently entitled to the capital of the Trust, and may require the Trustee to wind up the Trust and distribute the property of the Trust or the net proceeds of the property of the Trust; • The entitlements referred to in clauses XX(x) and XX(x) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by this Deed; • There must be only one class of Units issued; and • The proportion of trust capital to which a Unitholder is entitled on winding up or surrender of units must be (and is) fixed and must be (and is) the same as the proportion of income of the trust to which the Unitholder is entitled. And Inserting a new clause XX as follows: XX. Notices • Any notice required to be given to a Unitholder hereunder shall be deemed to have been duly given if it is in writing and either delivered or sent by post in a properly prepaid envelope addressed to such Unitholder at his address as appearing in the Register; • Where there are join Unitholders of a Unit a notice given to that joint Unitholder whose name stands first on the Register in respect of such Unit shall be sufficient notice to all such joint Unitholders; and • Any notice given by post shall be deemed to have been served on the third Business Day following the day when it was posted and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and posted by prepaid post and a statement signed by the Trustee that it was so posted and when shall be conclusive evidence of those facts. The amendments to the Trust Deed do not affect the assets of the Trust, nor do they cause the Trust to vest or resettle. The draft amendments to the Trust Deed will not affect the cost base of the already issued units of the Trust.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-5 | Income Tax Assessment Act 1997 section 104-20 | Income Tax Assessment Act 1997 section 104-25 | Income Tax Assessment Act 1997 section 104-55 | Income Tax Assessment Act 1997 section 104-60 | Income Tax Assessment Act 1997 section 104-65 | Income Tax Assessment Act 1997 section 104-70 | Income Tax Assessment Act 1997 section 104-75 | Income Tax Assessment Act 1997 section 104-80 | Income Tax Assessment Act 1997 section 104-85 | Income Tax Assessment Act 1997 section 104-90 | Income Tax Assessment Act 1997 section 104-20 | Income Tax Assessment Act 1997 section 116-20