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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:

Author Photo - Arthur Athanasiou CTA
Arthur Athanasiou CTA
Arthur, a partner at Thomson Geer Lawyers, has many years experience in complex tax litigation and tax audit negotiations and settlements. Arthur’s main area of practice is taxation advisory, with an emphasis on dispute resolution, particularly in the SME sector, with both the ATO and the SRO. 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 extensive experience in all areas of direct and indirect taxation and has qualified as a Chartered Accountant. He has also held senior taxation and management positions in the transport and motor vehicle industries, with specialist experience in logistics, supply chain, chain of responsibility and contract warehousing. Arthur is the President of The Tax Institute as well as a State Councillor, and also chairs the Law Institute’s Tax Law Advisory Committee. 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. Arthur has been recognised in Doyle’s Guide 2015 as a recommended tax lawyer in Victoria. Current at 18 August 2016 Click here to expand/collapse more articles by Arthur ATHANASIOU.
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