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On 24 October 2012, the ATO issued final Taxation Determination TD 2012/21 entitled "Income tax: does CGT event E1 or E2 in ss 104-55 or 104-60 of ITAA 1997 happen 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?"

It was previously released in draft form as TD 2012/D4.

The answer given is No, unless:

  • the change causes the existing trust to terminate and a new trust to arise for trust law purposes, or
  • 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.

The Determination notes that the Commissioner's document entitled "Creation of a new trust - Statement of Principles August 2001" was withdrawn on 20 April 2012, as the views expressed in that document were not consistent with the views expressed in TD 2012/21.


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