The biggest changes in estate planning in a generation

In the lead-in to this year's Death... and Taxes Symposium, we take a look back at an article published in the January issue of Taxation in Australia by Matthew Burgess, CTA, that highlighted just how much had changed in estates in the previous 12 months.

Matthew's article points out that we had seen more changes in key estate planning areas in a single year than each of the previous 30 years combined.

At the Symposium, taking place 18-19 July on the Gold Coast, Matthew co-presents the session 'How do you manage companies and trusts that were controlled by the now deceased?', alongside Todd Want, CTA, with facilitator Peter Godber, CTA.

In the session, they will look at whether it is better to maintain, revive or unwind trusts and companies during or after administration, and identify problems with old structures, considering director, trustee and adviser risks. They will also address trust and company taxation issues.

Matthew's original article 'The biggest year in estate planning in a generation' is excerpted below.


In light of ongoing changes to the taxation regime and the expanding wealth of Australia’s ageing population, there has for many years been a growing need for estate planning to utilise appropriate structuring.

That said, changes in the framework of the specific laws regulating estate and succession planning in Australia have stayed largely unchanged for over 30 years.

2018, however, has been an exception to recent history. Indeed, arguably, 2018 saw more changes in key estate planning areas in a single year than each of the previous 30 years combined.

Potentially fundamentally important shifts in approaches across the following areas have made headline news in the tax and estate planning arena in the last 12 months:

  • trust vesting; 
  • trust splitting; 
  • testamentary trusts and excepted trust income; and 
  • capital gains tax roll-overs on relationship breakdown. 

Each of the above areas is addressed in turn in the article.

Some history

One interesting aspect of the recent history in relation to the ATO’s approach to trust vesting involves the trust at the centre of the (in)famous Rinehart dispute.

Given what has been disclosed publicly, there are many who believe that Ms Rinehart successfully obtained a private ruling from the ATO in relation to whether there were any CGT consequences of the trust vesting when Ms Rinehart’s youngest child turned 25.

While it cannot be certain, it appears that PBR 1012254771092 relates to the Rinehart matter. PBR 1012254771092 carefully considers whether CGT event E5 occurs on the vesting of a trust. CGT event E5 is said by the ATO to occur when a beneficiary becomes “absolutely entitled” to a CGT asset of the trust as against the trustee.

The ruling then goes on to explore in some detail the broad position that the ATO adopts in these areas based on TR 2004/D25 (the “absolute entitlement ruling”).

The ATO confirms that, while the absolute entitlement ruling remains in draft, so long as it is not withdrawn, it does represent its view of the law.

Based on the analysis of the absolute entitlement ruling, the (so-called) “Rinehart ruling” concludes that, because no beneficiary was able to call for any one or more of the assets to be transferred to them, they were not entitled to any assets as against the trustee, and therefore, CGT event E5 did not occur on the vesting of the trust.

In many respects, the Rinehart ruling appears to heavily inform TR 2018/6.

In combination, TR 2018/6 and the Rinehart ruling make it clear that the ATO explicitly acknowledges that the vesting of a trust will not, by itself, result in any CGT event in many circumstances.

Matthew’s article goes on to look at:

  • Final trust vesting ruling 
  • Absolute entitlement ruling and TR 2017/D10 
  • Other changes to TR 2017/D10 
  • Unanswered questions 
  • Trust splitting, including
  • Examples 
  • Flawed assumptions
  • Resettlement, including
  • Case law 
  • Retrospective 
  • Concluding comments
  • 2018 federal Budget attack on excepted trust income, including
  • Excepted trust income rules 
  • Current limitations 
  • Furse’s case 
  • What might new rules attack? 
  • Family law CGT roll-overs, including
  • Property settlements
  • Subdivision 126-A
  • Appeal decision
  • The decision
  • Some lessons. 

Matthew concludes that, in modern estate planning, significant complexities from the interaction between the legislation relating to tax, trusts, bankruptcy, family law and superannuation have been omnipresent.

Ongoing changes to the superannuation regime aside, estate planning has largely been exempt from radical simultaneous rule overhauls. 2018 will be seen as an outlier to this position, at least in recent years.

With the post-baby boomer intergenerational wealth transfer wave gathering pace, the 2018 changes mean that it is critical that estate planning advisers fully understand the impact of the changes and invest to monitor their ongoing impact.

The full article can be viewed here.

This year's Death... and Taxes Symposium takes place on the Gold Coast, 18-19 July. Find out more about Matthew's session ans the rest of our program on our website.

Matthew Burgess co-founded View in 2014, having been a partner and lawyer at one of Australia’s leading independent law firms for over 17 years. Matthew’s passion is helping clients to successfully achieve their goals.
Matthew specialises in tax, estate and succession planning, providing strategic advice to business owners and high net worth individuals, and has been recognised in the ‘Best Lawyers’ list since 2014 in relation to trusts and estates and in ‘Doyles’ either personally or as part of View since 2015 in relation to taxation. In 2017 he was also nominated as Tax Partner of the Year (Lawyers Weekly).

While a significant focus of Matthew’s practice is on small to medium enterprises and private business owners, the growth in this area in recent years has meant that he also regularly works on transactions with listed companies. In part leveraging off the skills he has developed working in the SME market space, Matthew has been the catalyst in developing a number of innovative legal products for advisers and their clients.

As an author, Matthew is widely recognised as an expert in his field, who constantly creates bespoke revenue related strategies for the growth, management and protection of wealth.

Matthew is regularly published in Australia’s leading monthly tax journal, The Tax Institute’s Taxation in Australia, and Thomson Reuters’  Weekly Tax Bulletin

Written by practitioners for practitioners, Taxation in Australia is continually ranked as Australia's leading tax journal.

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