Private ruling: CGT - assets
Date of advice: 29 April 2025
Published: 7 July 2025
Ruling period: Income year ending 30 June 20XX | Income year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the execution of the proposed Deed of Variation cause CGT event E1 in section 104-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to happen? | A1: No. | Q2: Will the execution of the proposed Deed of Variation cause CGT event E2 in section 104-60 of the ITAA 1997 to happen? | A2: No.

Relevant facts and circumstances: The trust The Trust was established by indenture on XX XX 19XX between the Settlor and A and B (as Trustees). A and B died in 20XX. Following the death of B, C was appointed the sole trustee and appointor of the Trust as confirmed by the Deed of Confirmation of Current Trustee and Appointor. C Pty Ltd (Trustee) is the current trustee of the Trust. The Trustee replaced C as the trustee of the Trust pursuant to the Deed of Change of Trustee. The current directors of the Trustee are C, C's child and Z. D The Specified Beneficiary named in Item 1 of the Schedule to the Trust Deed is D. C and D are siblings. As mentioned, the parents of C and D have passed away. D does not have legal capacity to look after his own affairs. General beneficiaries of the trust The General Beneficiaries of the Trust are defined in the Trust Deed to mean: (a) the Specified Beneficiary (i.e. D); (b) any parent, spouse, widow, children, grandchildren and remoter issue of the Specified Beneficiary and the spouses, widows, widowers, children and remoter issue of such children and grandchildren; (c) any of the following whether constituted, formed, incorporated, resident or situate in Australia or elsewhere and whether so constituted, formed or incorporated at the date of the Trust Deed or any time after that date: (i) any eligible trust (which is defined in the Trust Deed to mean the trustee(s) of another trust fund in which the Specified Beneficiary or any of the beneficiaries referred to in paragraph (b) above or any entity named as Additional General Beneficiaries in Item 2 of the Schedule to the Trust Deed have an interest); (ii) any eligible corporation (which is defined in the Trust Deed to mean any legal entity [other than a company in the capacity as a trustee] in which the Specified Beneficiary or any of the beneficiaries referred to in paragraph (b) above or any entity named as Additional General Beneficiaries in Item 2 of the Schedule to the Trust Deed have an interest); and (iii) any other legal entity in which any eligible trust or any eligible corporation has any interest; (d) any charitable institution or charitable purpose to be selected by the Trustee in their absolute discretion; and (e) any persons, corporations and trusts named in Item 2 of the Schedule to the Trust Deed as Additional General Beneficiaries. Currently, there are no persons, corporations or trusts named in Item 2 of the Schedule to the Trust Deed as Additional General Beneficiaries. Therefore, there are currently no additional members included in the class of General Beneficiaries apart from those described above. Currently, the range of General Beneficiaries do not include: (a) any sibling, niece and nephew of D; (b) any children, grandchildren and remoter issue of any person described in paragraph (a) above; or (c) any spouse, widow, widower of any person described in paragraphs (a) or (b) above. D does not have and has never had any spouse or children. This means that there are, in actual fact, a very limited number of beneficiaries that can fall within the range of General Beneficiaries. In reality, the only beneficiaries of the Trust at present are D and any eligible trust or eligible corporation, noting that any such eligible trust or eligible corporation will only remain as General Beneficiaries whilst D is still alive. If D dies, there will be no General Beneficiaries of the Trust, except for charitable institutions. Proposed variation of the trust deed Clause X of the Trust Deed contains a general variation power to amend the Trust Deed. To avoid there being no General Beneficiaries of the Trust after D's death, the Trustee wishes to exercise its powers under the Trust Deed to vary the provisions of the Trust Deed by executing the Deed of Variation which will amend the Additional General Beneficiaries described in Item 2 of the Schedule to the Trust Deed. The Additional General Beneficiaries will be expanded to include: (a) any sibling, niece and nephew of the Specified Beneficiary (each an "Additional Beneficiary"); (b) any children, grandchildren and remoter issue of any Additional Beneficiary; and (c) any spouse, widow and widower of: (i) any Additional Beneficiary; or (ii) any children, grandchildren or remoter issue of any Additional Beneficiary. The effect of the new provisions is to include more relatives of D as additional members of the class of General Beneficiaries of the Trust.

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