Previously, there was some uncertainty as to what variations to a trust deed would constitute a resettlement and, therefore, trigger problems with both capital gains tax and stamp duty.
This had arisen as a result of the Statement of Principles issued by the Australian Taxation Office in 2001.
Following the decision in Commissioner of Taxation v Clark, the withdrawal of the Commissioner’s Statement of Principles and the subsequent issue of Taxation Determination 2012/21, it is now clearly accepted that in most cases, provided that a trustee validly exercises an existing power of amendment under the trust deed, those variations in and of themselves will not trigger a “resettlement”.
So long as the trust deed contains a power to vary the trust deed, the following matters will generally not constitute a resettlement:
- changing the Appointor;
- adding income streaming clauses;
- changing the vesting date; and
- adding contemplated classes of beneficiaries.
Of course, the above are general statements only and should not be relied upon when considering the tax consequences of varying any particular trust.
More information
For more information, please contact a member of our Estate Group on (03) 8600 8885.
Note: This update is a guide only and is not intended to constitute legal advice.