On 31 August 2011, the ATO issued a Decision Impact Statement in relation to the Supreme Court of Queensland (Court of Appeal) decision in Barkworth Olives Management Limited v FCT  QCA 80; 2010 ATC 20-172; 78 ATR 827.
The case concerned whether s 254(1)(e) of ITAA 1936 limits the personal liability of a trustee who has been conclusively assessed on the trust's net income, to trust amounts received by that trustee.
The Court held that the conflict between Div 6 and s 254(1)(e) was to be resolved by s 254(1)(e) giving way to those specific provisions in Division 6 which impose liability to tax upon a trustee (as an exception to the general rule that the beneficiaries are liable). Whilst s 254(1)(e) may qualify a personal liability of the trustee created by s 254, it does not qualify a trustee's personal liability created by other provisions (mentioned above) where the trustee is expressed to be liable to tax under a provision of Division 6.
The ATO states that in its view s 254 does not limit the personal liability of a trustee assessed to tax pursuant to ss 99A or 99; nor does it qualify the operation of section 177 or 5-5 of the ITAA 1997 in respect of such a liability.