Proposed legislation that is currently before Parliament, will provide for trust to trust roll-over relief where a CGT asset is transferred from one fixed trust to another fixed trust. Certain condition have to be met. These are that:

  • both trusts have the same beneficiaries with the same entitlements
  • both trusts have no material discretionary elements
  • the receiving trust is an “empty trust” i.e. has no other CGT assets, and
  • no exceptions apply
  • the trustee of the transferring trust and the trustee of the receiving trust must both choose the roll over.

The Explanatory Memorandum says that the objective of this roll over is to ensure that CGT considerations are not an undue impediment to the restructure of trusts. Where the above conditions are satisfied there is no change in underlying economic ownership. There therefore should not be any taxation consequences. These provision replace the former trust cloning provisions which are repealed in the same Bill.