“Settlement or declaration of trust” for CGT event E1 and native title

Published on 01 Apr 16 by "THE TAX SPECIALIST" JOURNAL ARTICLE

The interaction between trust law and capital gains tax has, in recent times, emerged as a focus of tax litigation. As the Income Tax Assessment Act 1997 imposes CGT in certain circumstances, CGT event E1 happens if a trust is created over a CGT asset by “declaration or settlement”. Three recent and important Federal Court decisions — Oswal, Taras Nominees and Kafataris — shed light on the interpretation of the terms “declaration or settlement” in the context of CGT event E1. This article focuses on the judicial analyses of the cases and explores whether the declaration or settlement of a trust imposes the beneficial interests on the trustee of a property trust.

The article also questions whether native title is considered an asset for CGT purposes and, if so, whether CGT event E1 applies to the creation of a trust under the Native Title Act 1993. The ATO’s views are also considered.

Author profile

Dr Fiona Martin CTA

Fiona is a Professor of Taxation and Business Law School of Taxation & Business Law UNSW Business School University of New South Wales. - Current at 29 May 2019

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