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Trust resettlements - Adrift in Theseus’ ship

Taxation in Australia | 1 Dec 11
 
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Published on 01 Dec 11 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

A trust may, in appropriate circumstances, offset a capital loss against a capital gain. If, however, in the meantime a resettlement of the trust has occurred, so that there is in reality a new trust, there can be no such offset. The High Court and the Federal Court, in the recent decision in the Clark case, appear to have settled the vexed issue of trust resettlements, holding that, when considering changes to a trust, provided there is sufficient continuity and identity in relation to certain aspects, there is no new trust.

This article analyses the law relating to trust settlements in the light of the Clark decision and in the context of income tax law. The article also considers
the Commissioner’s statement of principles which sets out the Commissioner’s views on trust resettlements, and questions whether current trust settlement theory can be reconciled with the Commissioner’s views.

Author profile

Arthur Athanasiou CTA-Life
Photo of author, Arthur ATHANASIOU Arthur Athanasiou, CTA (Life), is an Accredited Tax Law Specialist and Principal of AGA Legal Pty Ltd. He is a highly competent and well-respected tax lawyer with 30 years’ experience. While he provides clients with tax and structuring advice, his main area of focus is in resolving tax disputes with the ATO and SRO and settling tax audits. Arthur also practises in matters involving tax agents and inquiries by the Tax Practitioners Board including appealing adverse TPB decisions. His practice also extends to white-collar crime, and other taxation offences. He also has a Deceased Estates practice. Arthur has qualified as a Chartered Accountant and is a former President of The Tax Institute. He has been appointed as an Adjunct Professor at La Trobe University Law School and chaired the Law Institute’s Tax Law Advisory Committee for a decade. Arthur has been recognized by Doyle's Guide who has recognized him as a "Leading Lawyer, Tax Law, Victoria" multiple times (2016, 2018-2024) and a "Recommended Lawyer, Tax Law, Victoria" (2015, 2017). Best Lawyers Peer Review recognised him as "Best Lawyer Trusts and Estates" (2022-2026) and for his work in Tax Law (since 2023). He is a widely published writer on taxation issues and regularly appears in mainstream media and presents at tax conferences and seminars. - Current at 03 June 2025
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