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Draft ATO guideline on fixed trusts fail to provide certainty

Publication date: 22 Nov 16 | Source: CCH TAX WEEK

Issue: Issue 46, 18 Nov 2016

Pages: pp. 4-6


On 27 October 2016 the ATO released draft guidelines outlining the factors that the Commissioner will consider when deciding whether to exercise his discretion to treat a trust as a “fixed trust”. The Commissioner’s views are set out in Practical Compliance Guideline PCG 2016/D16.

Following the 2011 decision of the Federal Court in Colonial First State Investments Ltd v FC of T 2011 ATC ¶20-235, many trusts need to rely on the Commissioner to exercise a discretion to be considered a fixed trust. The Commissioner’s discretion is intended to provide for circumstances where, despite the trust not technically meeting the requirements to be a “fixed trust”, the likelihood of the beneficiary’s interest being defeated is low, and it would therefore be unreasonable in the context of the statutory scheme to treat the beneficiary’s interest as not constituting a “fixed entitlement”.

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Author profiles

Jonathan Ortner FTI
Jonathan is a partner in Arnold Bloch Leibler’s Sydney taxation group and practices in all areas of direct and indirect tax with a particular focus on the taxation of trusts and corporate income tax and mergers and acquisitions. Jonathan has also advised extensively on cross-border taxation issues; employment taxes, including the tax treatment of employee share schemes, termination payments and fringe benefits; and the GST implications of transactions and dealings in the development of property. Using his technical tax knowledge, Jonathan works with clients to obtain commercial and practical outcomes. He has particular experience in dealing with the Australian Taxation Office on complex tax issues in a dispute resolution context. Jonathan is a keen and active member of the tax community. As well as presenting on tax topics at various sessions and authoring a number of published articles, papers and bulletins, Jonathan is an active member of the Tax Institute’s GST and SME committees. Prior to joining Arnold Bloch Leibler in 2012, Jonathan worked in a financial advisory role at a top investment bank and a Big Four accounting firm. - Current at 22 October 2019
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Clinton Harding CTA
Clint is a partner at Arnold Bloch Leibler and leads the Sydney taxation practice. Clint advises across most taxes, with particular expertise in corporate and international tax, the taxation of financial instruments and transactions, and the management of tax audits and disputes with the ATO. Clint is the author of numerous tax articles, a regular presenter, and is currently a working member of The Tax Institute’s Large Business and International Committee. In 2018, Clint won The Tax Institute’s Corporate Tax Adviser of the Year Award and is the National Chair of the Law Council of Australia’s Taxation Committee. - Current at 26 June 2019
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