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Will CGT event A1, CGT event E1 or CGT event E2 in sections 104-10, 104-55 or 104-60 of the Income Tax Assessment Act 1997 happen on entering into the Deed of Renunciation?

No. This ruling applies for the following period: DD MM YYYY

The Company is the trustee of the Family Trust (the Trust). The Trust was established in xxx on DD MM YYYY and holds CGT assets. Person A is the sole director of the Company. Person B is the sole shareholder of the Company. The terms of the Trust are evidenced by the Trust Deed as varied by the Variation Deeds. The Specified Beneficiaries of the Trust as described in the Schedule to the Trust Deed are the children of Person C and Person B. Person C is deceased. Person B is alive. The children of Person C and Person B comprise: •                Person A; •                Person D (deceased); and •                Person E. Person A and Person E are both Specified Beneficiaries and General Beneficiaries of the Trust.

Person E commenced legal proceedings against the Company, Person A and Person B (in their capacity as Appointor) in the Supreme Court of XXX on DD MM YYYY seeking, among other things, the removal of the Company as trustee of the Trust (the Proceedings). On DD MM YYYY, Person A was substituted (by consent) as third defendant in the Proceedings in place of Person B as Appointor of the Trust. This resulted in the parties to the Proceedings being Person E, the Company and Person A (in their personal capacity and separately in their capacity as Appointor of the Trust). The parties intend to resolve the Proceedings on the following terms: •                By consent, the Proceedings be dismissed with no orders as to costs; •                Person E voluntarily renounces in their rights and interests as a General Beneficiary of the Trust; and •                Person A pays a cash amount to Person E from their personal funds. Person E has received discretionary distributions from the Trust in past income years. There are no unpaid present entitlements owed by the Trust to Person E. The Deed of Renunciation has not been signed, and the respective parties intend to sign it.

The Deed of Renunciation, once executed will effect the following changes for the Trust as stated in clause 2.1 of that Deed: Person E absolutely and irrevocably: a)             renounces all of their rights and interests as a General Beneficiary of the Trust, including any present or future entitlement - conditions advised; and b)             disclaims any entitlement to any unpaid income, net income and capital of the Trust Fund which might otherwise accrue to them as a General Beneficiary after the date of execution of the [Deed of Renunciation].

Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 section 104-55 Income Tax Assessment Act 1997 section 104-60

All legislative references are to the Income Tax Assessment Act 1997 unless otherwise specified. Summary The execution of the Deed of Renunciation will not cause: •                the disposal of a CGT asset (CGT event A1), •                the creation of a trust over a CGT asset (CGT event E1), or •                the transfer of a CGT asset to a trust (CGT event E2). Detailed reasoning CGT Events Subsection 104-10(1) says that CGT event A1 happens if you dispose of a CGT asset. Subsection 104-10(2) says that you dispose of a CGT asset if a change of ownership occurs from you to another entity. Subsection 104-55(1) says that CGT event E1 happens if you create a trust over a CGT asset by declaration or settlement. Subsection 104-60(1) says that CGT event E2 happens if you transfer a CGT asset to an existing trust. Effect of the Deed of Renunciation The Commissioner has issued Taxation Determination TD 2001/26 Income tax: capital gains: what are the capital gains tax consequences for a beneficiary of a discretionary trust who renounces their interest in the trust? It observes at Note 1 that:

A renunciation by a discretionary beneficiary would not normally have any CGT consequences for the trustee or for the trust. We do not think the Deed of Renunciation will in these circumstances create a new trust and it will not settle any asset on a different trust. There will be a continuity of beneficiaries and also a continuity of trust property under the Trust. The Deed of Renunciation will not cause the assets of the Trust to become subject to a separate charter of rights and obligations that amount to those assets being settled on the terms of a different trust. The execution of the Deed of Renunciation will not cause the ownership of a CGT asset to transfer from the trustee to any other entity. Therefore, none of CGT events A1, E1 or E2 will happen.