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Bamford – special leave granted

Publication date: 03 Nov 09 | Source: THE TAX INSTITUTE

Australia's premier professional tax body, the Taxation Institute of Australia, was not surprised by the High Court's decision this morning to grant special leave to appeal to the High Court in relation to the Bamford case.

Special leave has been granted for the High Court to consider two issues. Firstly, the meaning of the expression "income of the trust estate". Secondly, the meaning of the expression a "share" of the income of the trust estate.

The Bamford case concerns trust law issues in relation to which there have been differing views and uncertainty for many years. The decision of the Full Federal Court in Bamford offered clarity regarding the meaning of a "share" of trust income.  The Court concluded that a "share" of trust income refers to a beneficiary’s proportionate interest in the income. However, the decision did not provide sufficient clarity regarding the meaning of the expression "income of the trust". The decision resulted in uncertainty regarding how trusts and beneficiaries are taxed.

Taxation Institute President, Joan Roberts reflected that "given the uncertainty following the decision of the Full Federal Court and the fact that both the taxpayer and the Commissioner argued for special leave to be granted, the grant of leave to appeal to the High Court in the Bamford case is not surprising".

The Taxation Institute hopes that the High Court will take the opportunity to clarify the law in this area in a manner that will have broad application which is capable of providing guidance for taxpayers and their advisers.

Unfortunately, the immediate practical result is that taxpayers will not have any greater certainty until the High Court hears the case and hands down a judgment which may take considerable time. In the meantime, "the Practice Statement (PSLA 2009/7) issued by the Commissioner in August this year is likely to stay in place" stated Ms Roberts. In the interim, the Taxation Institute will be working with the Commissioner of Taxation to ensure taxpayers have the greatest degree of certainty possible pending the conclusion of the litigation.

"Taxpayers who have adopted the Full Federal Court's views in Bamford and who have not deliberately planned to achieve a tax benefit or pushed the envelope in terms of their tax planning arrangements should not be alarmed" concluded Ms Roberts.

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Media Contacts:
Joan Roberts, President - Taxation Institute of Australia on 0419 308 141
Angie Ananda, Tax Counsel - Taxation Institute of Australia on 02 8223 0011