Foreign beneficiaries beware of discretionary trusts following Greensill
Source: Taxation In Australia Journal Article
Published Date: 1 Jul 2020
Longstanding international taxation law principles assert that the taxation of ordinary income and statutory income such as capital gains should be determined based on the residency of the taxpayer and the source of the income. It appeared that this was accepted by the ATO with respect to foreign capital gains flowing through an Australian discretionary trust to a foreign resident up until an ATO consultation on these matters in 2016. The ensuing departure from this position became public knowledge by virtue of TD 2019/D6 and TD 2019/D7 and was recently tested in the Federal Court decision in Peter Greensill Family Co Pty Ltd (trustee) v FCT. For the reasons set out in the decision and discussed in this article, the result is that the trustee of an Australian discretionary trust is taxable on foreign capital gains distributed to foreign beneficiaries.
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- Published By: Thomas Mckenzie
- Published On:1 Jul 2020
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