MGS Private provides advice and services in relation to extending the vesting date of a trust.
The Australian Taxation Office (ATO) has clarified its stance on trust vesting dates in Taxation Ruling TR 2018/6. Contrary to common belief, reaching the vesting date does not automatically cause the trust to terminate or give rise to a new trust. Here are the key points:
- Vesting Date: The vesting date is when beneficiaries’ interests in the trust property become fully vested. The trust deed specifies this date and outlines the consequences (e.g., equal distribution of trust property to beneficiaries). Importantly, vesting does not inherently end the trust or create a new one.
- ATO’s View:
- Extension Before Vesting: If your trust has a vesting date of less than 80 years, or 125 years in Queensland, you can extend it before the original vesting date. However, the maximum extension period remains 80 years (except in South Australia and Queensland).
- Missed Vesting Date: If the vesting date has already passed, it's too late. The trust has vested, and it has effectively ended. Extending the trust beyond this point is not possible, even if all beneficiaries agree.
- Formal Process: To extend the vesting date to 80 years, or 125 years in Queensland, you'll need a Deed of Variation or a Court order. Implying an extension (e.g., through trustee and beneficiary actions) won't suffice.
Remember, proper processes can help manage capital gains tax and stamp duty liabilities associated with trust vesting, ensuring a smoother transition for your trust. Contact MGS Private for advice or assistance.
