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The Federal Court (Bennett J) has held that the taxpayer was not entitled to the 2 year limitation on amended assessments, because he was a "beneficiary of a trust estate" during the year of income, within the meaning of para (d) of item 1 in the table in s 170(1) of ITAA 1936. During the relevant income year, the taxpayer was named as a potential object of a discretionary trust but he did not receive any income from the trust during that year.

The taxpayer was appealing from the decision of the AAT in Yazbek v FCT [2012] AATA 477.

In particular, the Court held that the taxpayer was a "beneficiary" within the ordinary meaning of the word, and that there was nothing in the legislative context or the legislative history which would displace that meaning. Further, the Court held that there was no absurdity or incongruity in so finding.

Bennett J said at para 42:

"The ordinary meaning of 'beneficiary' is a person for whose benefit a trust is to be administered and who is entitled to enforce the trustee’s obligation to administer the trust according to its terms. I agree with the Tribunal that it applies to the meaning to be given to 'beneficiary' in the present context in the Act. That meaning accords with the ordinary and ordinary technical meaning given to 'beneficiary'."

And at para 43:

"I do not accept that there is an absurdity said to flow from the Tribunal’s construction that would mean that the ordinary meaning should be displaced. It is not an absurd construction that Parliament intended to increase the time limit for amending an assessment of a 'beneficiary' in the ordinary sense of the word where the 'risk' to the taxpayer is that the taxpayer would be called on to pay amounts that are lawfully due under the statute..."

The appeal was dismissed: Yazbek v FCT [2013] FCA 39 (Federal Court, Bennett J, 31 January 2013).


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