Alert

Who does this affect?

Anyone involved in the administration of trusts, particularly in the funds management industry.

What do you need to do?

Consider the impact of the ATO's position in calculating income, preparing distribution statements, applying for ATO rulings, and any ATO compliance activity.

Authors
Andrew Clements  
Partner

John Edstein  
Partner

Karen Rooke  
Special Counsel

---

John Edstein  
Partner
T +61 2 9296 2129

---

The High Court of Australia has granted special leave to appeal the Federal Court's decision in Bamford v Commissioner of Taxation.

In the special leave application, counsel for the Commissioner said that the Bamford litigation will be the first time that the High Court has had the opportunity to consider the meaning of all of the phrases “presently entitled”, “share” and “net income”. Counsel for the Commissioner said that the Bamford litigation will be particularly relevant to determining:

• the tax treatment of capital gains made by trusts; and

• what happens if there is a difference between the net income and the distributable income of a trust.

A summary of the Federal Court's decision in Bamford is available in our previous alert. A summary of the ATO's Practice Statement regarding how the ATO intends to administer the rules relating to the taxation of trusts, pending the High Court decision in Bamford, can be found here.