My understanding with trust cloning is that a current trust can be cloned and the assets distributed between the 2 trusts with the benefit of not having to pay Stamp duty and CGT. But to clone the trust the newly created trust must be exactly the same as the original ie: same trustee, appointer, beneficiaries, etc. Does this corelation have to be maintained after the trust is cloned eg: after cloning can the cloned trust have a new and different trustee appointed or must it reflect exactly the structure of the original trust.
Trust cloning Q.
- Thread starter eggnog
- Start date
Refer the ATO's position. And remember that Stamp duty may still apply.
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00109677.htm
Changing of beneficiaries etc at a later date can trigger a Re-Settlement so take care as stamp duty can be triggered again - ouch
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00109677.htm
Changing of beneficiaries etc at a later date can trigger a Re-Settlement so take care as stamp duty can be triggered again - ouch
CashflowPlus
My understanding is that, IF you can clone a trust in your situation, you can vary the terms of it shortly after the transfer of property is made.
Some things to note:
1. The trustee doesn't have to be the same at the time of the transfer.
2. There is no exemption in respect of stamp duty for transfers to a cloned trust.
3. The two trusts have to have the same beneficiaries and the EFFECT of the terms of the two trusts must be exactly the same. This is not just a matter of photocopying the original trust deed - in almost all cases, that won't work because the effect of the two trusts will be different.
The ATO takes a very hard line on cloning, and makes it extremely difficult to get the CGT exemption.
You will definitely need to get advice on this from an expert (who is a real expert in cloning, not just any old accountant or lawyer).
Good luck
My understanding is that, IF you can clone a trust in your situation, you can vary the terms of it shortly after the transfer of property is made.
Some things to note:
1. The trustee doesn't have to be the same at the time of the transfer.
2. There is no exemption in respect of stamp duty for transfers to a cloned trust.
3. The two trusts have to have the same beneficiaries and the EFFECT of the terms of the two trusts must be exactly the same. This is not just a matter of photocopying the original trust deed - in almost all cases, that won't work because the effect of the two trusts will be different.
The ATO takes a very hard line on cloning, and makes it extremely difficult to get the CGT exemption.
You will definitely need to get advice on this from an expert (who is a real expert in cloning, not just any old accountant or lawyer).
Good luck
There are a variety of reasons but a common one is "asset protection".
If there are two assets in the one trust where one is passive, such as an investment property and the other is active, say a trading business, then the latter could potentially put the former at risk.
If the trust is cloned then the assets are held by seperate trusts and the risk is mitigated.
If there are two assets in the one trust where one is passive, such as an investment property and the other is active, say a trading business, then the latter could potentially put the former at risk.
If the trust is cloned then the assets are held by seperate trusts and the risk is mitigated.
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Reducing land tax in some states?
In VIC and NSW it doesn't matter for special trusts (includes discretionary) as they don't get the threshold anyway.
Hi,
Cloned trusts must have the same vesting date as the existing trust so this doesn't get around the 80 year problem.
Victoria does have a $20,000 threshold so not worth it but WA has a clause enabling potential stamp duty savings via trust cloning. So in WA if you have multiple properties you may look at trust cloning for land tax purposes but as MattR has shown with his link to the ATO site you can get caught in a trap so be careful with cloning.
Cloned trusts must have the same vesting date as the existing trust so this doesn't get around the 80 year problem.
Victoria does have a $20,000 threshold so not worth it but WA has a clause enabling potential stamp duty savings via trust cloning. So in WA if you have multiple properties you may look at trust cloning for land tax purposes but as MattR has shown with his link to the ATO site you can get caught in a trap so be careful with cloning.
