Payment of a non-assessable amount to an owner of discretionary units and CGT event E4

Capital Gains Tax (CGT) event E4 will arise when a beneficiary receives a payment from a trustee of a trust in respect of the beneficiary’s unit or interest in that trust and either some, or all, of that payment is not included in the taxpayer’s assessable income.

An Australian Taxation Office (ATO) private binding ruling, and minutes from the National Tax Liaison Group, suggest that CGT event E4 will not arise when the payment of a non-assessable amount is made to an owner of discretionary units.

This article discusses the uncertainties surrounding this ruling and these minutes, and advocates for careful and responsible action when paying non-assessable amounts to the holders of discretionary units.

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For further Information please contact:

Phil Broderick
Principal
Sladen Legal
03 9611 0163
pbroderick@sladen.com.au

or

Delphine Tan
Associate
Sladen Legal
03 9611 0174
dtan@sladen.com.au

Sladen Legal

Sladen Legal, 707 Collins Street, Docklands, VIC, 3008