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19 May 09 Trust distributions and scheme profits omitted - JHDY

The AAT has varied the Commissioner's objection decisions in respect of family trust distributions and profits from the promotion of tax avoidance schemes that were said to have been omitted from the taxpayer's assessable income. The AAT found, on the evidence, that, in relation to one income year in dispute, trust distributions should be reduced having regard to the existing proportional distributions of income to the beneficiaries of the trust.

The AAT further found that the appropriate basis of assessment of the income or profits to the taxpayer from the promotion of tax avoidance schemes was by reference to reductions in his loan account with the family trust in the 2001 and 2002 years of income. The AAT was not satisfied that the assessments for the 1999 and 2000 years of income, based upon the increases in his loan account with the trust, represented the proper taxation outcome from the taxpayer's involvement in the promotion of the tax avoidance schemes. Accordingly, assessments of profits from the promotion of tax avoidance scheme arrangements via the trust for the 1999 and 2000 years of income were set aside. Penalty tax was reduced accordingly: JHDY and FCT [2009] AATA 356 (AAT, Dunne, Senior Member, 18 May 2009).

For a copy of the decision, go here.

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