{"id":1031,"date":"2026-02-18T04:41:23","date_gmt":"2026-02-18T04:41:23","guid":{"rendered":"https:\/\/www.trakaccountants.com.au\/blog\/?p=1031"},"modified":"2026-02-18T05:08:23","modified_gmt":"2026-02-18T05:08:23","slug":"trust-asset-transfers-cgt","status":"publish","type":"post","link":"https:\/\/www.trakaccountants.com.au\/blog\/trust-asset-transfers-cgt\/","title":{"rendered":"Trust Asset Transfers &#038; CGT"},"content":{"rendered":"\n<p>If you\u2019re thinking about moving property or investments <strong>into<\/strong> a trust, or <strong>out of<\/strong> a trust, it\u2019s worth slowing down for five minutes.<\/p>\n\n\n\n<p>These transfers can look \u201csimple on paper\u201d, but the ATO often treats them as <strong>CGT events with market value rules<\/strong>, and the tax bill can land at the worst time \u2014 especially around year-end planning.<\/p>\n\n\n\n<p>Here are <strong>three most common questions<\/strong> we get from business owners, investors and family groups.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><a>FAQ 1 \u2014 If I transfer an asset to my family trust for less than market value (or for free), how is CGT worked out? <\/a><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>In most related-party transfers, the ATO uses market value \u2014 not the price you picked.<\/strong><\/p>\n\n\n\n<p><strong>Example:<\/strong><br>Your property is worth <strong>$900k<\/strong>, but you \u201csell\u201d it to your trust for <strong>$800k<\/strong>, or you transfer it for $0.<\/p>\n\n\n\n<p><strong>What happens for tax purposes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You\u2019re generally <strong>treated as disposing of the asset at market value ($900k)<\/strong><\/li>\n\n\n\n<li>CGT is calculated using that market value<\/li>\n\n\n\n<li>The trust\u2019s <strong>cost base resets to the same market value<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>Why this catches people out:<\/strong><br>With related parties, the ATO isn\u2019t focused on your internal agreement \u2014 they\u2019re focused on whether the deal is <strong>arm\u2019s length<\/strong>. If it\u2019s not, market value tends to drive the outcome.<\/p>\n\n\n\n<p>\u2705 <strong>Practical tip:<\/strong> If you\u2019re transferring property, get a proper valuation and plan the cash-flow impact <strong>before<\/strong> you sign anything.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><a>FAQ 2 \u2014 I borrowed personally and on-lent the money to my discretionary trust. Can I claim interest?<\/a><\/h2>\n\n\n\n<p>This is a <strong>classic audit-risk area<\/strong>, especially when the trust is discretionary.<\/p>\n\n\n\n<p><strong>Common setup:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You take a personal loan from the bank<\/li>\n\n\n\n<li>You lend those funds to your discretionary trust to buy an investment<\/li>\n\n\n\n<li>You pay the bank interest<\/li>\n\n\n\n<li>The trust pays you <strong>no interest<\/strong> (or \u201cjust cost\u201d)<\/li>\n<\/ul>\n\n\n\n<p><strong>ATO risk:<\/strong> If you don\u2019t charge the trust a commercial rate, the ATO may argue you\u2019re not borrowing to produce assessable income \u2014 meaning your interest deduction is at risk.<\/p>\n\n\n\n<p><strong>To protect deductibility, the cleaner approach is:<\/strong><br>\u2705 Charge the trust <strong>a commercial (arm\u2019s length) interest rate<\/strong><br>\u2705 Typically that\u2019s <strong>your bank rate + a reasonable margin<\/strong><br>\u2705 The interest becomes <strong>your assessable income<\/strong>, supporting your own interest deduction<\/p>\n\n\n\n<p><strong>If you don\u2019t (or you charge too low):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Your interest deduction may be denied (ATO may argue mixed\/private purpose)<\/li>\n\n\n\n<li>The loan can be treated as a <strong>personal use arrangement<\/strong><\/li>\n\n\n\n<li>If it goes bad, you may not be able to claim a capital loss on that bad debt<\/li>\n<\/ul>\n\n\n\n<p>\u2705 <strong>Practical tip:<\/strong> If you\u2019re funding a trust, get the loan terms documented properly (and set the rate commercially) <strong>before funds move<\/strong>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><a>FAQ 3 \u2014 Can I transfer a loss-making asset to a related trust to offset a capital gain this year?<\/a><\/h2>\n\n\n\n<p>Be careful. This is where the ATO may look at <strong>\u201cwash sale\u201d behavior<\/strong> and <strong>Part IVA<\/strong>.<\/p>\n\n\n\n<p><strong>Scenario:<\/strong><br>You\u2019ve 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.<\/p>\n\n\n\n<p><strong>ATO concern:<\/strong><br>If the main purpose looks like creating a tax benefit (without a genuine commercial reason), the ATO may apply anti-avoidance rules.<\/p>\n\n\n\n<p><strong>What can this lead to:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The loss may be <strong>denied<\/strong><\/li>\n\n\n\n<li>Higher chance of review\/audit<\/li>\n\n\n\n<li>Potential penalties and interest depending on behavior and documentation<\/li>\n<\/ul>\n\n\n\n<p>\u2705 <strong>Practical tip:<\/strong> Related-party transfers need a <strong>clear commercial rationale<\/strong> \u2014 not just \u201cwe wanted a loss this year\u201d.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><a>Quick takeaway (Before You Restructure)<\/a><\/h2>\n\n\n\n<p>Trust structures can absolutely work \u2014 but <strong>asset transfers are not a DIY job<\/strong>. Small choices around <strong>pricing, loan terms, timing and documentation<\/strong> can change the tax outcome.<\/p>\n\n\n\n<p>If you\u2019re planning to move assets into or out of trust, we can help map out:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>which CGT event is likely to apply (including trust-specific events),<\/li>\n\n\n\n<li>the correct timing,<\/li>\n\n\n\n<li>market value requirements, and<\/li>\n\n\n\n<li>how to structure funding so deductions are defensible.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019re thinking about moving property or investments into a trust, or out of a trust, it\u2019s worth slowing down for five minutes. These transfers can look \u201csimple on paper\u201d, but the ATO often treats them as CGT events with market value rules, and the tax bill can land at the worst time \u2014 especially<a class=\"blog-more\" href=\"https:\/\/www.trakaccountants.com.au\/blog\/trust-asset-transfers-cgt\/\">Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":"","spay_email":"","footnotes":""},"categories":[153,39],"tags":[],"class_list":["post-1031","post","type-post","status-publish","format-standard","hentry","category-gstcompliance-updates","category-qas"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/1031","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/comments?post=1031"}],"version-history":[{"count":2,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/1031\/revisions"}],"predecessor-version":[{"id":1034,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/posts\/1031\/revisions\/1034"}],"wp:attachment":[{"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/media?parent=1031"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/categories?post=1031"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.trakaccountants.com.au\/blog\/wp-json\/wp\/v2\/tags?post=1031"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}