MGS Private · Trust Services

Extending the
Vesting Date of Trusts

Many trusts established in the 1980s and 1990s are approaching their vesting date — typically 80 years from establishment. Vesting triggers a deemed disposal of all trust assets at market value, with potentially significant CGT and stamp duty consequences.

The Vesting Problem

Why vesting is a
critical tax event

On the vesting date of a trust, the trust property must be distributed to the beneficiaries and the trust ceases. For tax purposes, this is treated as a disposal of the trust assets at their market value — potentially triggering CGT Event E5 (beneficiary becomes absolutely entitled) or CGT Event A1 on the distribution of trust assets at market value.

For trusts that have held property for decades — with significant appreciation in value — the CGT liability on vesting can be very large. Stamp duty may also apply on the transfer of property from the trustee to the beneficiaries on vesting.

Trusts established in the mid-1940s are already vesting. Trusts established in the 1970s and 1980s will vest within the next decade. The issue must be addressed well in advance — at least 2–3 years before the vesting date.

Whether the deed contains a power to extend the vesting date — the first critical question
ATO’s position on extending vesting — Taxpayer Alert TA 2012/8 and subsequent guidance
Whether an extension constitutes a resettlement — the analysis depends on each deed
The perpetuity period — whether State legislation imposes a hard limit
Stamp duty on the extension or change of trustee near the vesting date
Alternative strategies where extension is not possible — trust cloning, early distribution

MGS Private’s Approach

Analysing and implementing the extension

Deed Review

The first step is reviewing the trust deed to determine whether it contains an express power to extend the vesting date — and if so, the conditions for exercising that power. Many older deeds do contain this power, but it must be exercised correctly or a resettlement may result.

ATO’s TA 2012/8 Position

The ATO’s Taxpayer Alert TA 2012/8 and subsequent guidance establish that an extension properly authorised by the deed and carried out consistently with the trust’s pre-existing terms does not constitute a resettlement — but the exact analysis depends on each specific deed and its wording.

State Perpetuity Period

State perpetuity legislation imposes a maximum trust duration — typically 80 years. However, some States have amended their legislation to permit longer periods, and some deeds were drafted under different statutory regimes. MGS Private identifies the applicable State law and whether it constrains any extension.

Extension Strategy

Where extension is possible, MGS Private advises on the precise steps — including the required trustee resolution, deed of variation, and form and timing of the extension — ensuring no resettlement is triggered and no stamp duty exposure arises from the extension itself.

Where Extension Is Not Possible

Where the deed does not permit extension, or State perpetuity law prevents it, MGS Private advises on alternative strategies — including early distribution to beneficiaries with CGT concession planning, or trust cloning to split assets between separate structures before the vesting date arrives.

Trust approaching its vesting date?

Address the issue at least 2–3 years in advance — the cost and options narrow significantly as the date approaches.

(02) 9231 5111 contact@macquariegs.com.au

Extending theVesting Date of Trusts

Why vesting is acritical tax event

MGS Private’s Approach

Trust approaching its vesting date?

Extending the
Vesting Date of Trusts

Why vesting is a
critical tax event