Issue
Do the changes to the operation of the taxpayer superannuation fund result in the creation of a new eligible entity, for the purposes of Part IX of the Income Tax Assessment Act 1936 (ITAA 1936), such that any taxable gain is crystallised under CGT Event E1 (section 104-55) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The execution of the specified changes to the operation of the taxpayer superannuation fund, by the taxpayer, does not result a taxable gain being crystallised under CGT Event E1 (section 104-55) of the ITAA 1997.
Facts
The taxpayer superannuation fund ('the fund') is a superannuation scheme established by Act of Parliament ('the fund Act'), with a board as trustee. The rules of the scheme are also contained in the fund Act. The fund is a complying fund for the purposes of the ITAA 1936.
Legislation was enacted to enable the fund to be regulated under the Superannuation Industry (Supervision) Act 1993 , and a proprietary company was established to act as trustee (the new trustee). The new trustee has adopted a trust deed replicating, as far as possible, the benefit provisions contained in the fund Act, as well as other provisions. The fund Act has been repealed and the investments and liabilities of the fund transferred to the new trustee.
Notwithstanding the changes made, the taxpayer eligible entity has continued intact, and no new eligible entity has been created. The assets of the fund have been held by the trustees, on substantially the same terms, on behalf of the same eligible entity and its members, at all relevant times.
Reasons for Decision
Section 104-55 of the ITAA 1997 provides: (1) [Application] CGT event E1 happens if you create a trust over a *CGT asset by declaration or settlement... * denotes a term defined in subsection 995-1(1) of the ITAA 1997
Notwithstanding the changes made to the operation of the fund, no new fund or trust or eligible entity has been created for the purposes of Part IX of the ITAA 1936. The fund property has at all times, therefore, been held on behalf of the same eligible entity. Accordingly, CGT event E1 does not occur as a result of the amendments in question.