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Trusts and arm's length income - the Allen's Asphalt case.

Publication date: 23 Sep 11 | Source: WEEKLY TAX BULLETIN

Issue: Issue 40, 23 Sep 2011


In Allen (Trustee), in the matter of Allen's Asphalt Staff Superannuation Fund v FCT [2010] FCA 1276, Collier J found that the fund there had derived special income as that term is defined by s 273(7) of the ITAA 1936.

That fund appealed that decision to the Full Federal Court which handed down its decision on 7 September 2011 ([2011] FCAFC 118.

The issue there under consideration was whether certain income distributed by a unit trust to a superannuation fund was "special income" as defined by former s 273(7) of the ITAA 1936.

Former s 273(1) was one of a pair of provisions which might result in "income derived by a [superannuation fund] as a beneficiary of a trust estate" being deemed to be special income for the purposes of that Act. That pair of provisions was s 273(6) which applied where the income was derived by a discretionary trust, and s 273(7) which applied where income was derived by a fixed trust.

If that income was "special income", tax might be levied on that income at the maximum personal tax rate.

Former s 273(6) has now been replaced by s 295-550(4) of the ITAA 1997 and s 273(7) has been replaced by s 295(5) of the ITAA 1997. Those replacement sections are substantially identical to the sections that they replaced.

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Author profile

Robert Richards
Robert practices as a solicitor specialising in providing revenue, trust, superannuation and corporate law advice to high net worth individuals, corporations, accountants, other solicitors and the bar. He is regularly involved in the carriage of tax litigation involving matters heard by the High Court (for example the Bamford matter), the Federal Court, and the Administrative Appeals Tribunal. Prior to practising as a solicitor he was a partner of an international firm of accountants. - Current at 23 October 2013
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