Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust [2019] FCAFC 226

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust [2019] FCAFC 226 Appeal from: Trustee for the Michael Hayes Family Trust v Commissioner of Taxation [2019] FCA 426

File number: QUD 255 of 2019

Judges: GRIFFITHS, DERRINGTON AND STEWARD JJ

Date of judgment: 16 December 2019

Catchwords: TAXATION – public trading trusts – whether a unit trust is a public trading trust – whether an exempt entity had the right to acquire or become the holder of units in the unit trust that entitled it to not less than 20% of the beneficial interests in the income or property of the unit trust – whether s 102P(10) of the Income Tax Assessment Act 1936 (Cth) on its proper construction provides for a proportionate tracing of units through one or more interposed trusts TAXATION – trust income – whether trustee of a trust exercised the power to accumulate income by crediting its accounting profit to a "Retained Profits Account" rather than distributing it to the unitholders – whether financial statements of the trustee were sufficient to prove that it had exercised a certain power under the trust deed – whether the taxpayer was presently entitled to a share of the net income of the trust TRUSTS – construction of trust deed – relevance of surrounding circumstances – ambiguity – mistake – where trust deed identified a named company "as trustee for" a specified superannuation fund as the "Second Absolute Beneficiary" of the trust – where the named company had in fact ceased to be the trustee of the superannuation fund – where a deed of rectification purported to rectify the trust deed as and from the establishment of the trust – whether the reference to the named company is a case of ambiguity or mistake – whether construction of the trust deed is to be undertaken having regard to evidence of surrounding circumstances