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Does extending the term / duration of a trust cause a resettlement?
This is an important issue as resettlement of a trust may have significant ramifications including: Capital Gains Tax; Stamp Duty and Income Tax. The Australian Taxation Office (ATO) has stated that given the absence of clear judicial guidance on this, and provided that the following conditions are satisfied, a mere extension of the term of the trust will not result in a resettlement:
1. The Trust Deed confers an express power to alter the termination date;
2. The Trust Deed and surrounding circumstances do not indicate that a particular trust period was a fundamental feature of the particular trust relationship; and
3. Other accompanying circumstances do not indicate a fundamental change to the trust.