Private ruling: Change of trust vesting date
Published: February 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2012

Ruling: Q1: Will changing the vesting date of the trust estate be a capital gains tax (CGT) event? | A1: No

Relevant facts and circumstances: The trust estate is a testamentary trust created by a will. All assets of the trust are shares listed on the Australian Stock Exchange. You, as trustee, are considering submission to the court to change and extend the current vesting date.

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

Reasons for decision: Summary: In its table of sections, Subdivision 104-E of the Income Tax Assessment Act 1997 (ITAA 1997) lists CGT events that may happen in relation to trusts, namely: · Creating a trust over a CGT asset: CGT event E1 · Transferring a CGT asset to a trust: CGT event E2 Converting a trust to a unit trust: CGT event E3 Capital payment for trust interest: CGT event E4 · Beneficiary becoming entitled to a trust asset: CGT event E5 · Disposal to beneficiary to end income right: CGT event E6 · Disposal to beneficiary to end capital interest: CGT event E7 · Disposal by beneficiary of capital interest: CGT event E8 Creating a trust over future property: CGT event E9 Taxation Determination TD 2012/21, which is about 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, confirms amending the trust deed by changing the vesting date of a trust does not give rise to the happening of a CGT event (refer to Example 3). In respect to CGT events E1 and E2 listed above, TD 2012/21 confirms a CGT event will not happen unless: (i) the change causes the existing trust to terminate and a new trust to arise for trust law purposes or (ii) the effect of the change or court approved variation is such as to 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 general, CGT events E1 to E9 listed above describe CGT events happening due to the creation of new trusts and/or changes in the assets and/or beneficiaries of existing trusts. Thus, changing the vesting date of a trust does not give rise to the happening of any of these CGT events. To conclude, in your case, changing the vesting date of the trust estate will not be a CGT event.

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