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07 Sep 1111 Commissioner refused special leave in continuity of trust case - Clark

The High Court (French CJ, Crennan and Kiefel JJ) has refused the Commissioner special leave to appeal from the decision of the Full Federal Court in FCT v Clark [2011] FCAFC 5 (Full Federal Court; Edmonds and Gordon JJ, Dowsett J dissenting; 21 January 2011).

The Full Federal Court held that a trust was entitled to offset capital losses of $2,492,653.50 incurred in the 1993 income year against capital profits of $1,932,006 derived in the 2001 income year, despite a change of trustee, a change of control of the trust, a change in the trust assets and a change in the unitholders of the trust between those two income years.

In dismissing the special leave application, French CJ said:

"The Full Court of the Federal Court held, contrary to the Commissioner’s contentions, that there was an identity between the trust estate in the year in which the assessable capital gain was made and the trust in the years in which the capital losses were incurred so as to allow the latter to be offset against the former.

In our opinion, the decision of the Full Court involved characterisation and evaluation of the continuity of the trust in the trust estate. It is not attended with sufficient doubt to warrant the grant of special leave. Special leave will be refused with costs."

FCT v Clark [2011] HCATrans 236 (High Court; French CJ; Crennan and Kiefel JJ; 2 September 2011).


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