Income tax: capital gains: can a trustee of a trust estate be an 'original beneficial owner' for the purpose of section 160ZZI of the Income Tax Assessment Act 1936?

Where an assurance policy on the life of a person is taken out by a trustee of a trust estate on behalf of beneficiaries of that trust, the trustee is not considered to be an "original beneficial owner" for the purpose of section 160ZZI. The trustee is, in such cases, the legal owner of the rights under the policy, but by virtue of the fact that the trustee holds property on trust for another person, the trustee can never be the beneficial owner.

Accordingly, on disposal of rights under the policy, the trustee would be subject to CGT where an amount of money or other consideration is paid by the trustee to acquire those rights (subsection 160ZZI(3)) unless :- (i) subsection 160ZZI(3A) applies, or (ii) the trustee is a bare trustee i.e. there is a beneficiary who is absolutely entitled to an asset (the rights under the policy) as against the trustee. By virtue of section 160V, the disposal of rights under the policy by the bare trustee will be deemed to be a disposal by the beneficiary (the "original beneficial owner").