Trust cloning for CGT

Subdivision 126-G (s 126-215 to 126-260) provides a limited roll-over for the transfer of assets between trusts with the same beneficiaries, each of which has the same interests in each trust.
Specifically, the roll-over is available where:

both trusts are fixed trusts
the receiving trust is either a newly created trust, or an existing trust with no CGT assets (except minimal cash or debt or rights to facilitate the transfer of assets) just before the transfer time
both trusts have the same beneficiaries
both trusts have the same classes of membership interests
the market value of each class of membership interest remains the same across the two trusts after the asset transfer, and
none of the exceptions apply.

In these circumstances, any capital gain or capital loss made by the trustees is disregarded. In addition, the first elements of the cost base and reduced cost base of the beneficiaries’ membership interests in both trusts after the transfer is taken to equal the cost base of the original membership interest in the transferring trust before the transfer.
The roll-over is intended to provide limited roll-over relief in circumstances where the underlying ownership of the assets of the trust remains the same.
Subdivision 126-G is an important provision when considering structures for land acquisitions as well as those involving hotels and entertainment venues.

MGS Private regularly advises on Subdivision 126-G and the associated benefits.