If you’re thinking about moving property or investments into a trust, or out of a trust, it’s worth slowing down for five minutes.

These transfers can look “simple on paper”, but the ATO often treats them as CGT events with market value rules, and the tax bill can land at the worst time — especially around year-end planning.

Here are three most common questions we get from business owners, investors and family groups.

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FAQ 1 — If I transfer an asset to my family trust for less than market value (or for free), how is CGT worked out?

In most related-party transfers, the ATO uses market value — not the price you picked.

Example:
Your property is worth $900k, but you “sell” it to your trust for $800k, or you transfer it for $0.

What happens for tax purposes:

• You’re generally treated as disposing of the asset at market value ($900k)
• CGT is calculated using that market value
• The trust’s cost base resets to the same market value

Why this catches people out:
With related parties, the ATO isn’t focused on your internal agreement — they’re focused on whether the deal is arm’s length. If it’s not, market value tends to drive the outcome.

✅ Practical tip: If you’re transferring property, get a proper valuation and plan the cash-flow impact before you sign anything.

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FAQ 2 — I borrowed personally and on-lent the money to my discretionary trust. Can I claim interest?

This is a classic audit-risk area, especially when the trust is discretionary.

Common setup:

• You take a personal loan from the bank
• You lend those funds to your discretionary trust to buy an investment
• You pay the bank interest
• The trust pays you no interest (or “just cost”)

ATO risk: If you don’t charge the trust a commercial rate, the ATO may argue you’re not borrowing to produce assessable income — meaning your interest deduction is at risk.

To protect deductibility, the cleaner approach is:
✅ Charge the trust a commercial (arm’s length) interest rate
✅ Typically that’s your bank rate + a reasonable margin
✅ The interest becomes your assessable income, supporting your own interest deduction

If you don’t (or you charge too low):

• Your interest deduction may be denied (ATO may argue mixed/private purpose)
• The loan can be treated as a personal use arrangement
• If it goes bad, you may not be able to claim a capital loss on that bad debt

✅ Practical tip: If you’re funding a trust, get the loan terms documented properly (and set the rate commercially) before funds move.

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FAQ 3 — Can I transfer a loss-making asset to a related trust to offset a capital gain this year?

Be careful. This is where the ATO may look at “wash sale” behavior and Part IVA.

Scenario:
You’ve got a large capital gain this year. You transfer an asset with an unrealized loss to a related trust to crystallize the loss and offset the gain.

ATO concern:
If the main purpose looks like creating a tax benefit (without a genuine commercial reason), the ATO may apply anti-avoidance rules.

What can this lead to:

• The loss may be denied
• Higher chance of review/audit
• Potential penalties and interest depending on behavior and documentation

✅ Practical tip: Related-party transfers need a clear commercial rationale — not just “we wanted a loss this year”.

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Quick takeaway (Before You Restructure)

Trust structures can absolutely work — but asset transfers are not a DIY job. Small choices around pricing, loan terms, timing and documentation can change the tax outcome.

If you’re planning to move assets into or out of trust, we can help map out:

• which CGT event is likely to apply (including trust-specific events),
• the correct timing,
• market value requirements, and
• how to structure funding so deductions are defensible.