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Oswal v FCT: Has your trust triggered a tax liability?

Published on 01 Dec 13 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

CGT event E1 happens if you create a trust over a CGT asset by “declaration” or “settlement”. CGT event E5 happens if a beneficiary becomes “absolutely entitled” to a CGT asset of a trust as against the trustee. In a recent case, Oswal v FCT, the Federal Court was asked to consider two questions about the application of these CGT events to a discretionary trust. The court found for the taxpayers on the application of CGT event E5 and for the Commissioner on the application of CGT event E1. The taxpayers have applied for leave to appeal on the CGT event E1 question. This article examines the judgment and its implications in detail.

The author concludes that the judgment is relevant for any tax adviser when advising on trusts. It emphasises the importance of considering the tax implications associated with any resolution of a trustee, particularly if the resolution is somewhat out of the ordinary.

Author profile:

Richard Raffell
Richard is a Barrister with Blackstone Chambers. Current at 01 December 2013
 
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