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lkw0113(Master)Master
20 Jan 2025

Hi, I know if an individual who is an Australian tax resident stops being an Australian tax resident, he will have to pay CGT, and the capital gains are calculated by assuming he sells all his stocks at market price at the moment he stops being an Australian tax resident.


But are there similar rules for trusts? Does a trust need to pay CGT in a way similar to the above

  1. if its beneficiaries stop being Australian tax residents? (If so, how many beneficiaries have to stop being Australian tax residents to trigger this problem? What if some beneficiaries aren't Australian tax residents to begin with?)
  2. if its trustee stops being an Australian tax resident?

Thanks a lot!

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610 views
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Most helpful reply

Andante(Dynamo)Registered Tax Professional
4 Feb 2025

Yes, there are similar deemed disposal rules for a trust. It will cease to be an Australian resident if the trustee stops being an Australian resident or the trust's central management and control is no longer located in Australia. In practice, this might be particularly relevant where the beneficiaries are directors of a trustee company. In that case, the individual's change in residence can trigger a change in residence of the trustee and in turn, of the trust.

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Most helpful reply

Andante(Dynamo)Registered Tax Professional
4 Feb 2025

Yes, there are similar deemed disposal rules for a trust. It will cease to be an Australian resident if the trustee stops being an Australian resident or the trust's central management and control is no longer located in Australia. In practice, this might be particularly relevant where the beneficiaries are directors of a trustee company. In that case, the individual's change in residence can trigger a change in residence of the trustee and in turn, of the trust.

lkw0113(Master)Master
8 Feb 2025

Thanks. But I thought a company is deemed an Australian tax resident as long as it is incorporated in Australia, regardless of where its directors go?

Andante(Dynamo)Registered Tax Professional
14 Feb 2025

Yes, incorporation in Australia does result in the company being treated as a resident in Australia. However, a company can become resident in more than one country and an applicable Double Tax Agreement (DTA) may apply to determine residency status under tie-breaker tests. This is a complex area and you should obtain advice from a qualified specialist.

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When is a trust deemed to leave Australia | ATO Community