Trusts 2011

Trust resettlements - Adrift in Theseus' ship

Source: Taxation In Australia Journal Article

Published Date: 1 Dec 2011


A trust may, in appropriate circumstances, offset a capital loss against a capital gain. If, however, in the meantime a resettlement of the trust has occurred, so that there is in reality a new trust, there can be no such offset. The High Court and the Federal Court, in the recent decision in the Clark case, appear to have settled the vexed issue of trust resettlements, holding that, when considering changes to a trust, provided there is sufficient continuity and identity in relation to certain aspects, there is no new trust.

This article analyses the law relating to trust settlements in the light of the Clark decision and in the context of income tax law. The article also considers
the Commissioner’s statement of principles which sets out the Commissioner’s views on trust resettlements, and questions whether current trust settlement theory can be reconciled with the Commissioner’s views.

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Trusts 2011

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