We have been asked by our client to prepare Deed of Variation of Discretionary Trust which we have done and all the parties have executed the deed. The Appointees, Trustees and Beneficiaries have all changed. We believe the changes do not result in a resettlement of the trust.
Are there are stamp duty implications?
Does the Deed of Variation of Discretionary Trust need to be registered anywhere (State Revenue Office)?
Thank you for the question.
The following is an extract from the By Lawyers Trusts commentary:
Resettlement occurs when a new trust estate is created out of the old trust’s assets. This can create significant stamp duty and capital gains liabilities, as the trustee is considered to have disposed of the assets of the trust and created a variation in the interests of the trust’s beneficiaries.
Taxation Determination 2012/21 has confirmed that the majority of amendments to trust deeds, where the amendment power is validly exercised, will not create a new trust over the trust assets. This includes changes to beneficiaries, insertion of income and streaming provisions – including definition of net income, income characterisation and any amendments prompted by the High Court decision in Commissioner of Taxation v Bamford; Bamford v Commissioner of Taxation [2010] HCA 10 – and expanding the powers of investment for the trust or extending the vesting date.
There are no duty implications unless resettlement occurs and the trust contains dutiable property: see Duty and trusts on the State Revenue Office website.
The deed of variation does not need to be registered.
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