Are you looking to transfer an asset between trusts?
At a glance: The Tax Office has recently addressed the criteria that must be met in order to access the Trust Cloning CGT exemption.
Trust Cloning refers to the Capital Gains Tax (CGT) exemption that is available where an asset is transferred between two trusts and the beneficiaries and terms of the trusts are the same. In a recent speech, Second Tax Commissioner Bruce Quigley said the Tax Office acknowledged that there were contentious issues regarding the strictness of the test of sameness that must be met in order to access this exemption. These issues include the requirement that both trusts have the same appointers and make the same family trust or interposed entity election in respect of the same test individual or family group. As such, the Tax Office has recommended funding for suitable test cases on these issues to assist taxpayers when accessing the Trust Cloning CGT exemption.
However, until these test cases are heard, taxpayers in doubt are advised to apply for a private ruling before transferring an asset to a cloned trust.
Remember: You must be aware of the requirements for the CGT exemption to apply as the criteria that must be met for the Trust Cloning CGT exemption is very strict. Contact us if you require any clarification or advice.
