Private ruling: Income tax ~~ Capital gains tax ~~ CGT events ~~ CGT event A1 - disposal of a CGT asset Income tax ~~ Capital gains tax ~~ CGT events ~~ CGT events E1 to E9 - trusts
Published: June 2015
Ruling period: Year ended 30 June 2015.
Date scheme commenced: 1 July 2014.

Ruling: Q1: Will the variations proposed to the Trust trigger a trust resettlement and subsequently CGT event A1, E1 or E2? | A1: No.

Relevant facts and circumstances: The Trustee is proposing to exercise a clause of the Trust Deed which provides that the Trustee has the right to revoke, add to or vary the Trust Deed, subject to the requirement that no Guardian is named in the schedule to the Trust Deed, the Trustee may exercise all the reserved and restricted powers in its absolute and uncontrolled discretion and without notice to any other person. The power contained in the clause of the Trust Deed that the Trustee is proposing to exercise is a reserved power. There is currently no Guardian of the Trust named in the schedule of the Trust Deed. The proposed variations of the Trust Deed will have the effect of appointing a guardian of the Trust as well as enabling the Guardian to waive the giving of notice by the trustee where the trustee is required to give notice to the Guardian prior to the exercise of certain powers. The Trustee is also proposing to vary the Trust Deed to have the effect of expressly naming the specified beneficiaries. Moreover, The Trustee proposes to limit the General Beneficiaries to biological lineal descendants of the Specified Beneficiaries, charities and other eligible trusts and eligible corporations approved by the Trustee. Furthermore, the variations will have the effect of making amendments to the manner in which income is to be distributed in future. In addition, the variations will require any shares in the new corporate Trustee to be held and controlled by the same members as the current corporate Trustee and to have the same constitution.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10. | Income Tax Assessment Act 1997 Section 104-55. | Income Tax Assessment Act 1997 Section 104-60.

Reasons for decision: Summary: The proposed variations are a valid exercise of an amendment power contained in the Trust Deed and do not terminate or discontinue the Trust. Therefore, a trust resettlement has not occurred and CGT events A1, E1 or E2 have not been triggered.

Subject: Income tax ~~ Capital gains tax ~~ CGT events ~~ CGT event A1 - disposal of a CGT asset Income tax ~~ Capital gains tax ~~ CGT events ~~ CGT events E1 to E9 - trusts: Proposal by the Trustee to exercise a clause of the Trust Deed where the Trustee has the right to revoke, add to or vary the Trust Deed.