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Testing the limits of trust flexibility after Bamford: The Colonial First State decision


The 2010 High Court decision in Commissioner of Taxation v Bamford confirmed that there is a degree of flexibility for trustees when determining the income of a trust for the purposes of s 97 of the Income Tax Assessment Act 1936 (Cth). More recently, in Colonial First State v Commissioner of Taxation, a taxpayer sought to test the limits of a trustee's ability to determine and stream income among unitholders. Unfortunately, the nature of the case before the court meant that many questions were left unanswered. In this article, the author provides a detailed analysis of the Colonial First State decision, examining each of the issues that were before the court, together with the Commissioner's position and the court's response. The article concludes with a brief survey of the proposed new taxation regime for managed investment trusts. The author notes that Treasury's position suggests some continued conflict between commercial objectives and the precise terms of the tax law.

Author profile

Christopher Colley CTA
Chris, CTA, is a Director at Greenwoods & Herbert Smith Freehills. Chris advises corporate and government clients on real estate investments and trusts, as well as share buybacks and international financial transactions. He has wide experience in mergers and acquisitions, cross-border leasing, international bond issues, securitisation, real estate development, structured investment products and GST matters. He is a member of an Australian Taxation Office working group helping to implement new Taxation of Financial Arrangements provisions and also lectures at the University of Sydney. - Current at 17 March 2016
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