Thursday, April 1, 2010

Pre CGT assets owned by family trusts

Given the Easter break for many next week, and our promise to post a blog posting each week - the posting that would have been next Monday is being posted today.

Over the last eighteen months, we have had an increasing number of clients needing to consider various aspects of the capital gains tax (CGT) rules as they relate to assets acquired pre CGT (i.e. before September 1985).

Someone like Bernard Salt (Salt is a renowned demographic consultant out of KPMG in Melbourne – see his website at would undoubtedly be able to explain that the reason for this has something to do with the baby boomer generation – i.e. people who were in the early to mid part of their wealth creation in the 1980s are now looking at retirement and succession issues.

Two of the potentially trickier aspects of the CGT regime, relate to the deeming provisions under Division 149 (formerly section 160ZZS) and CGT event K6 (formerly section 160ZZT).
As an accountant reminded me last week, there is an old ATO ruling (let me know if you want a copy of it) that confirms Division 149 can in fact apply to discretionary trusts – i.e. the underlying CGT status of trust assets can be impacted on by the way in which distributions have been made out of the trust over the term that the asset was owned.

Best wishes for Easter.

Matthew Burgess