Private ruling: CGT - trust resettlement
Published: June 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the changes to the Trust proposed by the Amending Deed result in the creation of a new trust, triggering capital gains tax (CGT) event E1? | A1: No

Relevant facts and circumstances: The Trust was established by deed. The trust deed provides the trustee with the power to amend the deed. It is proposed to insert a new clause into the trust deed.

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

Reasons for decision: Summary: CGT event E1 is triggered when a trust resettlement occurs, that is, when one trust estate has ended and another has replaced it. Tax Determination TD 2012/21 sets out the Commissioner's view in respect to trust resettlements and whether or not a resettlement has occurred. TD 2012/21 asserts that a valid amendment to a trust will not result in the termination of a trust as long as: • the amendment is made pursuant to an existing power; • the amendment does not cause the trust to terminate for trust law purposes; and • the effect of the amendment does not lead to a particular asset being subject to a separate charter of rights and obligations such as to give rise to the conclusion that that asset has been settled on terms of a different trust. In your case, the proposed variations to the existing trust deed would be a valid amendment to the Trust, not resulting in a termination of the Trust, and will not result in the happening of CGT event E1.