Re-settlement of trusts – towards a definitive test

Until relatively recently, it was generally thought that amending a Trust Deed to add beneficiaries (for example) would amount to a Re-Settlement (Re-Settlement) of the trust and the creation of a new trust with consequential effects of capital gains tax (GST) and potential liability for state based transfer duty.   The case of Commissioner of Taxation v Clark [2011] FCAFC 5 (Clark) provides authority for the proposition that this is not necessarily the case. Clark and provides a basis for the development of a formulaic approach to the development of a set of broad tests which can be applied to ascertain whether a Re-Settlement may or may not occur.

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