ARTICLE · 02 JUNE 2022

Trust Resettlement Series: Amending The Trust Deed

Herbert Smith Freehills Kramer LLP

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Resettlement risk continues to be one of the most significant risks that trustees and beneficiaries need to manage in the administration of trusts of any kind.

AustraliaTax

Jinny Chaimungkalanont

By Mark Peters.

Resettlement risk continues to be one of the most significant risks that trustees and beneficiaries need to manage in the administration of trusts of any kind. The duty and tax consequences of an inadvertent resettlement of some or all of the trust property on new trusts are manifold, including:

declaration of trust duty on the dutiable value of the property resettled;
transfer duty or trust acquisition/surrender duty on the dutiable value of the property resettled; and
capital gains tax (CGT) on creating a trust over a CGT asset (E1) or transferring a CGT asset to a trust (E2).

Dixon J's comment inBuzza v Comptroller of Stamps (VIC)¹that "[i]t is notoriously difficult to define a settlement, but that does not mean that it is difficult to recognise one" continues to resonate today; however the ever increasing complexity of commercial transaction involving trusts means that it is no longer so simple to recognise. In the modern trust

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