Case D22

Judges: AM Donovan Ch

GR Thompson M
RK Todd M

Court:
No. 2 Board of Review

Judgment date: 18 May 1972.

---

G.R. Thompson (Member): I join my colleague, Mr. Todd, in his decision and adopt his reasons.

2. Although the trusts with which we are concerned could, and did, give rise to tax advantage to the parents of the beneficiaries, the evidence placed before the Board leaves me with the opinion that each trust was designed to confer a real and substantial benefit upon the beneficiaries as a part of an arrangement of the financial affairs of a family. Substantial distribution had been made to the beneficiaries as a matter of course, and I think there is reason to believe that this practice would have continued had it not been that a misconception was implanted in the mind of the trustee by the action of the Commissioner in invoking sec. 102. That the Commissioner had misconceived the law in assessing under sec. 102 became clear following the decision of the High Court in
Truesdale's case 70 ATC 4056 ; 120 C.L.R. 353 , but by then the point of no return as far as distribution or accumulation in the years of income presently before the Board had been reached.

3. I am satisfied as a matter of belief that if it had not been that the trustee felt that, as a result of the action of the Commissioner, he stood under the shadow of sec. 102, distribution would have been made and the trustee would not have been exposed to sec. 99A in the years under review.

4. Section 99A(3)(c) provides that in forming an opinion for the purposes of sec. 99A(2) ``the Commissioner shall have regard to such other matters, if any, as he thinks fit''. Standing as I now do in the stead of the Commissioner, I see fit to have regard to the foregoing in forming the opinion that it would be unreasonable that sec. 99A should apply to the trust estates under

---

ATC 138

present consideration in relation to the years of income ended 30 June 1966, 1967 and 1968.

5. It follows that the objections succeed, and the trustee of these trusts should be assessed on the net income of those trusts at the rates which apply to assessments under sec. 99 of the Income Tax Assessment Act.