For the most part, an amending deed is unlikely, of itself, to impact on the carry-forward of trust losses under Schedule 2F. It is, of course, possible for a deed of amendment to affect the application of the Schedule 2F regime as discussed above in the discussion of family trust elections. Similarly, the insertion of a clause into a unit trust deed requiring units to be issued or redeemed for a price determined on the basis of “net asset value according to Australian accounting principles” may result in that unit trust qualifying as a fixed trust for loss carry-forward purposes.
From a CGT perspective, analysis comes broadly within the topic discussed under the heading of resettlements and requires consideration of the Commissioner’s amended Statement of Principles.
There is no provision in Part 3-1 of the 97 Act which deals expressly with “resettlements” or which deems a change of ownership of CGT assets in a trust fund to occur as a result of amendments being made to its trust deed. Nor is there any express concept of a CGT event happening as a result of such an amendment.
The CGT provisions which are relevant are CGT event A1 and CGT event E1.
CGT event E1 happens “if you create a trust over a *CGT asset by declaration or settlement”.
Within the statutory context of Division 6 and the relevant provisions of the 97 Act, it would appear that if a trust fund ceases and is replaced by a new trust, income losses and capital losses of the trust which has ceased to exist would not be available to the new trust. Similarly, a pre-CGT asset which became owned by the new trust after 20 September 1985 would be acquired by the new trust, and would therefore lose its pre-CGT status.
In particular, the following make it clear that for the purposes of both the 36 Act and the 97 Act a trust is a separate taxable entity:
- Division 6 of Part III of the 36 Act treats the calculation of the assessable income of a trust conceptually as a separate entity;
- Sub-sections 9600-100(1)(f) and 9600-100(2) define and treat the trust and the trustee as separate entities;