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Trust splitting: The ATO’s controversial new TD 2018/D3

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Published on 01 Oct 18 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

The release of TD 2018/D3 represents the ATO’s first public view on the topic of trust splitting and draws hard-line conclusions regarding the CGT consequences of trust splitting arrangements. The draft determination concludes that a trust split will usually trigger CGT event E1, which will come as a surprise to many taxpayers, given the ATO’s previous private ruling decisions on the topic. The draft determination fails to offer legally sound explanations or provide sufficient case law authority and, worse, is proposed to apply with retrospective effect. This article examines the circumstances in which trust splitting usually arises; the ATO’s views in previous private rulings and in the current draft determination; and a number of concerns raised by the draft determination in its current form.

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Andrew HENSHAW
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Lin (Rosalind) Li
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