Private ruling: Income Tax - Capital Gains Tax - Trust Resettlement
Date of advice: 12 December 2019
Published: February 2020
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will the variation to the Trust Deed result in a resettlement of the trust and cause a capital gain tax event? | A1: No. The variation of the Deed is a valid exercise of the Trustees powers and the change will not cause the existing trust to terminate; nor will it lead to a particular asset being settled on terms of a different trust. It is considered that the variation will not result in a change of ownership of any of the trust assets. As such, the variation of the Deed will not cause CGT event E1 or E2 to happen. It is also considered no other CGT event will occur. Further information on types of CGT events can be found on our website by searching QC 22154.

Relevant facts and circumstances: The trust is discretionary trust and an Australian resident trust for taxation purposes. The trust deed was executed and within the trust deed, the trustee has the valid powers to revoke, add to, release, delete, or vary all or any of the trust powers or provisions and will vary the trust deed accordingly. Clause X states that the powers of the Trustee under clause X include the power to appoint or remove beneficiaries. The trustee will remove foreign beneficiaries, secondary beneficiaries and tertiary beneficiaries.

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