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MEMBER 51 writes:

“As the instructing solicitor in Gutteridge and FCT ([2013] AATA 947), I read with interest Mark Pizzacalla’s review of the case (see p 410 of the March 2014 issue of Taxation in Australia).

Given that the decision turned so much on findings of fact favourable to the taxpayers, there would have been little point in the Commissioner appealing and he released an impact statement instead.

Contrary to Mr Pizzacalla’s concept of ‘future implications’ arising out of the case, I think it simply serves to highlight the importance of relevant evidence. Of course, that necessarily entails a detailed consideration of the taxpayers’ particular circumstances, including material documentation, when seeking to satisfy the small business CGT concessions or, indeed, any other tests imposed by revenue legislation.

Given that the Commissioner already recognises that the appointor of a discretionary trust can control the trust for relevant purposes (in this case, the taxpayers’ accountant), practitioners ought not take for granted the status of the ‘main players’ as determinative of control. In Gutteridge, both the taxpayer’s daughter and the appointor gave evidence that they would not act contrary to Mr Gutteridge’s instructions, thereby going a long way to establishing the fact of his control under s 328-125(3) of the Income Tax Assessment Act 1997 (Cth).

Although the outcome was predictable, it was a shame that the Commissioner could not be persuaded to accept the undeniable facts of the case in advance of the AAT’s encouragement to that effect — a substantial cost saving thereby lost to each side without good reason.

Ian Collie

Cleary Hoare Solicitors”

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