Canberra, 31 October 2008: The Assistant Treasurer, the Hon Chris Bowen MP, today announced the end of the CGT exemption for trust cloning.

The trust cloning exceptions in CGT events E1 and E2 previously meant that a CGT event did not occur if assets were transferred to a trust from another trust which had the same beneficiaries and terms.

The ATO had recently expressed frustration with the administrative burden and cost associated with the trust cloning rules. In particular, the ATO had been swamped by complex private ruling requests. There was also disagreement between the ATO and practitioners over which characteristics of the trust needed to be the same in order to qualify for the exception.

Mr Bowen said that removing the trust cloning exception is consistent with the policy principle of taxing capital gains that arise where there is a change in ownership of an asset. A mere change of trustee of a single trust will continue not to trigger a CGT taxing point.

Legislation giving effect to this measure will be introduced as soon as practicable. Initial consultation will be undertaken on the design of these amendments and an exposure draft of the legislation will be published on the Treasury website.

The amendments will be applicable to CGT events occurring after 31 October 2008.

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Government Abolishes Trust Cloning Tax Concession