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The ATO has published a Decision Impact Statement in relation to the Full Federal Court decision in Murdoch v FCT [2008] FCAFC 86; 2008 ATC 20-031; (2008) 68 ATR 490. The case concerned the characterisation as income or capital of an amount paid by trustees of a trust to a beneficiary entitled to income for life in consequence of a claim made for an amount as recompense for moneys not had as a result of breach of fiduciary duty by the trustees.

The ATO states that the view of the Court was that the taxpayer's claim was a claim against the corpus beneficiary (who was also one of the trustees) for an accounting by him to her of an actual capital profit or gain seen by the Court as having been made by him and to an entitlement to a constructive trust over the assets of the trust estate, with the result that the amount received by the taxpayer was not income. The ATO says that it is of the view that the decision is of limited application because of the unique facts of the case.

For a copy of the Decision Impact Statement, go here

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