Splitting a Family Trust is useful when you are ready to hand control of the Family Trust to different family members. Splitting a Family Trust is also useful when high-risk assets (e.g. businesses...
Splitting a Family Trust is useful when you are ready to hand control of the Family Trust to different family members. Splitting a Family Trust is also useful when high-risk assets (e.g. businesses) are in the same trust as safe assets (e.g. shares). The business assets contaminate all of the trust assets (even the safe assets). If the business fails, all of the assets in the Family Trust are lost.
Up until 31 October 2008, it was relatively simple to clone a trust - the Australian Tax Office (ATO) was of the view that cloning did not result in a CGT event.
However, on 31 October 2008, the ATO announced that the 'trust cloning' exceptions in CGT Event E1 and E2 would be removed for events happening after 31 October 2008.
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