Cessation of special disability trusts
1209ZD Cessation of special disability trusts
If:
a special disability trust ceases to exist or ceases to be a special disability trust; and
a person had transferred an asset to the trust during the period of 5 years immediately preceding the cessation; and
section 1209Z, 1209ZA or 1209ZC applied to the transfer;
then the transfer is taken, after the cessation, to be a disposal or disposition of the asset that occurred at the time of the transfer.
The amount of the disposal or disposition is taken to be the amount worked out using the formula:
Start formula open bracket Asset value times start fraction Final value of trust assets over Initial value of trust assets end fraction close bracket plus Subsection 1209ZA(2) amount end formula
where:
asset value means:
if section 1209Z or 1209ZC applied to the transfer—the value of the asset at the time of the transfer; or
if subsection 1209ZA(1) applied to the transfer—$500,000; or
if subsection 1209ZA(2) applied to the transfer—the difference between the value of the asset at the time of the transfer and the amount that was taken under that subsection to be the amount of the disposal or disposition of the asset.
final value of trust assets means the value of all of the assets of the trust at the time of the cessation.
initial value of trust assets means the value of all of the assets of the trust at the time of the transfer.
subsection 1209ZA(2) amount means the amount (if any) that was taken under subsection 1209ZA(2) to be the amount of the disposal or disposition of the asset.
If the special disability trust ceases to exist, or ceases to be a special disability trust, because the principal beneficiary dies, the value of the asset at the time of the transfer is taken for the purposes of this section to be the value of so much (if any) of the asset as has not been returned to the person who had transferred the asset to the trust.
This section does not affect the application of section 1209Z, 1209ZA or 1209ZC to the transfer prior to the cessation.
The statute text is free to read above. View subscription options to unlock the case-law research tools for each provision.