Foreign beneficiaries: caught in Australia’s sprawling CGT web
Published Date: 15 Oct 2025
Is the interposition of an Australian trust between a foreign beneficiary and the disposal of foreign movable property a fair basis to tax? The Full Federal Court in Peter Greensill Family Company Pty Ltd v FCT denied CGT conduit relief to a foreign beneficiary that derived capital gains on movable property through an Australian resident trust. Australia’s conduit taxing claim is prone to producing economic double taxation owing to the coexistence of overlapping taxing claims in relation to the same amount of income across different persons (eg beneficiary, trustee or transferor) and at different points (eg derivation at the trust level, trust distribution and beneficiary receipt). Domestic relief mechanisms that are designed to prevent a beneficiary and trustee being assessed on the same amount of income target a purely domestic trust scenario. Similarly, art 13 of the OECD Model Treaty, which aims to relieve overlapping taxing claims in relation to gains, operates poorly in a cross-border trust context. The problem is magnified by the broad scope of Australia’s conduit taxing claim. Few trusts qualify for relief under the neighbouring CGT exemption provision, s 855-40 of the Income Tax Assessment Act 1997 (Cth), owing to the stringency by which fixed trust classification is determined and the unworkability of the chain-of-trust exemption.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
- Published By: Jack Della Marta
- Published On:15 Oct 2025
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page