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Does CGT event C2 apply when a beneficiary’s interest in a trust ends?


CGT event C2 applies when a beneficiary’s ownership of an intangible “CGT asset” is either redeemed, cancelled, released, discharged, satisfied, has expired or is abandoned, surrendered or forfeited. The relevant statutory provision is broadly drafted and it appears possible that it could apply to the ending of a beneficiary’s interest in a trust. This article examines the nature of a beneficiary’s interest in a trust, whether this is an asset for CGT purposes, and whether or not CGT event C2 applies when this interest is surrendered or forfeited. It also discusses when CGT event E4 applies to payments in respect of interests in trusts other than unit trusts.

The author concludes that a beneficiary’s interest in a trust is a CGT asset, but that CGT event C2 will not usually apply to such an interest, and that CGT event E4 also has very limited application, unless the trust is a unit trust.

Author profile

Dr Fiona Martin CTA
Fiona is a solicitor, academic and chartered tax adviser with The Taxation Institute. She commenced working as an academic after several years as a lawyer, both with the government (including the Attorney-General's Department) and in private practice. Her expertise and research are in the taxation law area and in particular how it relates to charities and interacts with issues relating to human rights and traditional land owners. Fiona has published many articles in highly regarded international and Australian law journals, including the Australian Tax Forum and Common Law World Review. She has presented at conferences on issues relating to taxation concessions applying to charities, the application of the GST particularly as it relates to charities and income tax and property development generally. She has also published a number of book chapters and a textbook in the revenue law area. In 2013, she was awarded her doctorate on the application of income tax principles to resource agreements with Indigenous Australians, with particular emphasis on the use of Indigenous charities as a tax-exempt structure. She has also received several research awards. - Current at 01 April 2016
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