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Trust resettlements - Adrift in Theseus’ ship


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.

Author profile

Arthur Athanasiou CTA-Life
Photo of author, Arthur ATHANASIOU Arthur Athanasiou CTA (Life) practises mainly in the area of taxation advisory, with an emphasis on dispute resolution, particularly in the SME sector, with both the ATO and the SRO. Arthur has many years experience in complex tax litigation and tax audit negotiations and settlements. He also has broad experience in the taxation of trusts and SME entities, with an emphasis on Div 7A and high wealth individuals and family groups. Arthur has qualified as a Chartered Accountant and also held senior taxation and management positions in the transport and motor vehicle industries. Arthur is a former President of The Tax Institute, has chaired the Law Institute’s Tax Law Advisory Committee for a decade and now serves on the Industry Advisory Board of the IPA-Deakin University SME Research Centre. Arthur is an Accredited Tax Law Specialist and a widely published writer on taxation issues. He regularly appears in the mainstream media and presents at tax seminars and discussion groups. - Current at 21 September 2018
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