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04 Jun 10 Update on Bamford

On 2 June 2010, the ATO released the Decision Impact Statement (DIS) on the High Court decision in the Bamford Case (Bamford v Commissioner of Taxation [2010] HCA 10). The DIS outlines the ATO view of the decision in relation to the meaning of the phrase 'income of the trust estate' and the words 'that share of the net income'. The ATO also released a new practice statement which sets out the approach the ATO will take in relation to compliance activities for the 2009-10 and earlier income tax years.

The fact that the Commissioner of Taxation sought fit to take these issues to the High Court demonstrates the uncertainty in this area of the law. The Bamford judgment of the High Court attempted to provide judicial clarity to a confused area of tax law - the area dealing with trusts.

The Bamford Case and the DIS still leave many issues in relation to the taxation of trusts unresolved. In the DIS, the ATO acknowledges there remains considerable uncertainty about the application of the law in this area.

The Taxation Institute will be continuing to advocate for the Government to step in with a legislative solution on this issue.

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