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The AAT has upheld objections lodged by two taxpayers in relation to additional amounts included in their assessable income as a result of adjustments made to the net income of a trust of which they were two discretionary beneficiaries.

After the end of the relevant income years, the corporate trustee of the trust had made distributions of income to the two beneficiaries, purportedly pursuant to resolutions made by the trustee before the end of the relevant years of income. On the basis of these distributions, the Commissioner took the view that the two beneficiaries were presently entitled to the income of the trust estate, and included the additional net income in their assessable income in the same proportion as the original distributions.

However, the evidence led by one of the taxpayers, a director of the corporate trustee, was that there were no meetings of the corporate trustee in relation to the distributions at any time, and no discussion with the taxpayer's accountant about distributions at any time prior to the end of the relevant income years. As a result, the AAT held that the default of appointment clause operated and that there were 46 persons (including the 2 taxpayers) who had a present entitlement (in equal shares) to the income of the trust.

The Commissioner's objection decision was set aside, and the matter remitted to the Commissioner for reconsideration. The AAT noted that it would be a matter for the Commissioner to determine whether any further assessments should (could?) be issued.

Hopkins and Anor and FCT [2012] AATA 324 (AAT, Hack SC DP, 31 May 2012)


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