Edited version of private advice

Authorisation Number: 1051979330901

Date of advice: 5 May 2022

Ruling

Subject: Fixed entitlements

Question 1

Will the Commissioner exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 to deem the Unitholders of the Trust as having fixed entitlements to all of the income and capital of the Trust?

Answer

Yes.

Question 2

Will the Commissioner exercise the discretion in former subsection 160APHL(14) of the ITAA 1936 to treat the Unitholders of the Trust as having a vested and indefeasible interest in so much of the corpus of the Trust as is comprised by the trust holding?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 20XB

Year ending 30 June 20XC

Year ending 30 June 20XD

Year ending 30 June 20XE

Year ending 30 June 20XF

The scheme commences on:

1 July 20XA

Relevant facts and circumstances

This description of facts is based on the following documents. The documents form part of and are to be read with this description. The relevant documents are:

•         The Private Ruling Application (and attachments);

•         The emails from the ATO; and

•         The emails to the ATO from Client's tax agent at various dates.

Background

General

The Trust was established in the last few years by deed (Trust Deed) as an Australian unit trust and had XXX original Unitholders, which are Australian family trusts. On establishment of the Trust, the Unitholders respectively held a XX% beneficial interest in the Trust respectively.

The trustee of the Trust is B Pty Ltd (Trustee). The Units in the Trust are not listed on any stock exchange and are not anticipated to be in the foreseeable future.

A Deed of Variation (Variation Deed) was settled in accordance with the requirements of the Trust Deed to vary the Trust Deed for the purposes of ensuring that certain clauses would not cause a defeasance of the Unitholders' interests in the income or capital of the Trust.

The Trust is not a Managed Investment Scheme (MIS) under Chapter 5C of the Corporations Act 2001 (Cth) (Corporations Act) and is not a widely-held unit trust.

The Trustee is not the holder of an Australian Financial Services License (AFSL) for the purpose of Part 7.6 of the Corporations Act.

The Unitholders made their investments by subscribing for Units in the Trust.

The Trust was established for the purpose of investing in innovative start-up companies (Investee Companies).

The investments in the Investee Companies have been, and are anticipated to continue to be, in the form of ordinary shares.

The Trustee is seeking the Commissioner of Taxation to exercise his discretion pursuant to subsection 272-5(3) of Schedule 2F to the ITAA 1936 to deem the Trust to be a "fixed trust" to enable the carrying forward and utilisation of tax losses.

The Trustee is seeking the Commissioner of Taxation to exercise his discretion pursuant to the former subsection 160APHL(14) of the ITAA 1936 to deem the Unitholders' as holding a fixed interest in the corpus of the Trust to enable the Trustee to distribute any franked dividends it derives to Unitholders during the Ruling Period.

Relevant legislative provisions

Income Tax Assessment Act 1936

Division 272

Section 272-5 of Schedule 2F

Subsection 272-5(1) of Schedule 2F

Subsection 272-5(2) of Schedule 2F

Subsection 272-5(3) of Schedule 2F

Paragraph 272-5(3)(b)

Section 272-35 of Schedule 2F

Subsection 272-59(2) of Schedule 2F

Section 272-65 of Schedule 2F

former section 160APHL

former subsection 160APHL(11)

former subsection 160APHL(13)

former subsection 160APHL(14)

former subsections 160APHL(14)(a), (b) and (c)

Paragraph 177EA(5)(b)

Income Tax Assessment Act 1997

Section 104-10

Section 104-55

Section 104-60

Section 104-65

Section 104-75

Paragraphs 207-150(1)(c) to (h)

Subsection 995-1(1)

Taxation Administration Act 1953

Section 357-110

Section 359-5

Corporations Act 2001

Chapter 5C

Reasons for decision

Question 1

Summary

The terms of the trust instrument (the Trust Deed) do not provide the Unitholders with vested and indefeasible interests in all of the income and capital of the Trust. However, the Commissioner considers that it is reasonable to exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 to treat the Unitholders of the Trust as having fixed entitlements to all of the income and capital of the Trust.

[All legislative references are to the Income Tax Assessment Act 1936 (ITAA 1936) unless otherwise stated.]

Detailed Reasoning

Generally

A 'fixed trust' is defined in subsection 995-1(1) of the ITAA 1997, and section 272-65 of Schedule 2F to the ITAA 1936. That definition provides that:

A trust is a fixed trust if persons have fixed entitlements to all of the income and capital of the trust.

The definition of 'fixed entitlement' in subsection 995-1(1) of the ITAA 1997 provides that 'an entity has a fixed entitlement to a share of the income or capital of a trust if the entity has a fixed entitlement to that share within the meaning of Division 272 in Schedule 2F to the Income Tax Assessment Act 1936.'

Specifically

Subsection 272-5(3) of Schedule 2F to the ITAA 1936 contains a discretion, whereby in cases where beneficiaries do not have a fixed entitlement, the Commissioner may, for the purposes of the Act, treat such beneficiaries as having a fixed entitlement where it is reasonable to do so based upon the factors prescribed in paragraph 272-5(3)(b). Paragraph 272-5(3)(b) stipulates that the Commissioner may treat a beneficiary as having a fixed entitlement (in cases where in fact beneficiaries do not have a fixed entitlement) having regard to:

(i)    the circumstances in which the entitlement is capable of not vesting or the defeasance can happen; and

(ii)   the likelihood of the entitlement not vesting or the defeasance happening; and

(iii)  the nature of the trust.

Therefore, it is a pre-condition of the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 that a beneficiary does not have a requisite fixed entitlement under subsection 272-5(1).

Although the PBR applicant does not argue that subsection 272-5(1) of Schedule 2F to the ITAA 1936 is satisfied in respect of the Trust Deed, for the purposes of the matters that the Commissioner is required to consider in deciding whether to exercise the discretion in subsection 272-5(3) it is necessary to identify powers which may defease a vested interest in the income or capital of the Trust.

The term 'vested and indefeasible' is not defined in the taxation legislation.

Practical Compliance Guideline 2016/16 (PCG 2016/16) does discuss the meaning of the terms 'vested' and 'indefeasible' in the context of section 272-5 of Schedule 2F to the ITAA 1936.

The Explanatory Memorandum (EM) to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 does discuss its ordinary meaning at some length, at paragraphs 13.4 to 13.9.

The meaning of the term 'vested and indefeasible' (in the context of Schedule 2F to the ITAA 1936) has not been judicially considered, other than a discussion in Colonial First State Investments Ltd v Commissioner of Taxation [2011] FCA 16; (2011) 192 FCR 298; 81 ATR 772; 2011 ATC 20-235 in the limited context of amending the constitution of a registered managed investment scheme under section 601GC of the Corporations Act 2001.

However, the term 'vested and indefeasible' does appear in subsection 95A(2) of the ITAA 1936 and has been considered in that context by the courts - refer to Estate Mortgage Fighting Fund Trust v FC of T 2000 ATC 4525; Walsh Bay Developments Pty Ltd v Commissioner of Taxation (1995) 95 ATC 4378; Dwight v Commissioner of Taxation (1992) 92 ATC 4192; Harmer v FC of T (1991) 173 CLR 264; 91 ATC 5000. Also relevant are MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494; 99 ATC 4937; Queensland Trustees Ltd v Commissioner of Stamp Duties (1952) 88 CLR 54; and Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490.

It is an essential element of subsection 272-5(1) of Schedule 2F to the ITAA 1936 that in order to have a fixed entitlement to a share of income or capital there must be a vested or indefeasible interest 'under a trust instrument'. In all cases, the determining factor in deciding if fixed entitlements exist will be the terms of the trust instrument under which the trust is constituted. Neither the form of the trust nor the labels that are attached to it can determine this question.

For the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, the trust instrument is the Trust Deed settled on 30 January 2019, as amended by the Deed of Variation dated 8 October 2019. It is accepted that the Trust Deed provides Unitholders with a vested interest in the income and capital of the Trust (clause 10.12 in respect of income and clause 16.4 in respect of capital).

As per paragraph 16 of PCG 2016/16, the Trust Deed contains certain clauses by which a Unitholder's interest in a share of the income or capital of the Trust may be defeased. Therefore, it can be concluded, in accordance with subsection 272-5(1) of Schedule 2F to the ITAA 1936, that all beneficiaries (Unitholders of the Trust) do not have fixed entitlements to all of the income and capital of the Trust.

Clauses in the Trust Deed which contain powers which cause a beneficiary's interest in the income or capital of the Trust to be defeasible

Clause A Issue of Units

Clause A provides that additional Units may be issued.

Clause B requires that additional Units are issued on the basis of the net asset value (NAV) of the Trust according to Australian accounting principles.

This will satisfy the requirements of the 'savings rule' in paragraph 272-5(2)(d) of Schedule 2F to the ITAA 1936 such that the ability to issue additional Units by the Trustee will not constitute a defeasible power.

Clause C Redemption of Units

Clause C provides that Units may be redeemed at the request of a Unitholder.

Clause C also provides that Units must be redeemed on the basis of the NAV of the Trust according to Australian accounting principles.

This will satisfy the requirements of the 'savings rule' in paragraph 272-5(2)(d) of Schedule 2F to the ITAA 1936 such that the ability to redeem Units by the Trustee will not constitute a defeasible power.

Clause D Amendments to this Deed

Clause D effectively provides that the Trust Deed may be amended by the Trustee subject to the Corporations Act.

Any ability to amend the Trust Deed, whether requiring unanimous approval or not, will constitute a power capable of defeating a beneficiary's interest in the income or capital of the Trust. As noted by Stone J in Colonial First State Investments Ltd v Commissioner of Taxation [2011] FCA 16; (2011) 192 FCR 298; 81 ATR 772; 2011 ATC 20-235 at [106]: it follows [from unit holders' ability to amend the Constitution] that the members could vote to terminate the present right to a share of income and capital. An amendment, whether approved by Unitholders or effected by the Trustee's own act, could also permit the amendment of clauses which currently do not contain defeasible powers to do so.

Consideration of the exercise of the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936

Subsection 272-5(3) of Schedule 2F to the ITAA 1936 contains a discretion, whereby in cases where beneficiaries do not have a fixed entitlement, the Commissioner may treat such beneficiaries as having a fixed entitlement, having regard to the factors prescribed in paragraph 272-5(3)(b).

In terms of paragraph 272-5(3)(a):

The beneficiaries (Unitholders) of the Trust have a vested interest in the income and capital of the Trust, as detailed above.

Further, as per paragraph 25 of PCG 2016/16 the trust is not a discretionary trust or a trust with default income or capital beneficiaries - that is, no beneficial interest in the income or capital of the trust is capable of being defeated, partly or wholly, by the exercise of a power of appointment of income or capital by the Trustee or other donee.

However, the beneficiaries (Unitholders) do not have an indefeasible interest in the income and capital of the Trust.

In terms of subparagraph 272-5(3)(b)(i) -

The circumstances in which the defeasance of the interest can happen (in respect of the particular clauses of the Trust Deed) have been discussed above.

In terms of subparagraph 272-5(3)(b)(ii) -

The likelihood of the defeasance happening (in respect of the particular clauses of the Trust Deed discussed above):

Clause D Amendments to this Deed

It is noted that the Trust Deed has not been amended to defeat a Unitholder's interest in the Trust.

The Assumptions included for the purposes of this Ruling include that: The Trustee will not exercise a power capable of defeating a Unitholders' interest to defeat a Unitholder's interest in the income or capital of the trust.

As such, it is considered unlikely that a defeasance of a Unitholder's interests will occur as the result of the existence of the powers contained within this clause of the Trust Deed.

In terms of subparagraph 272-5(3)(b)(iii) -

The nature of the trust:

The Trust is a private Australian unit trust which holds shares in underlying Investee Companies. The Trust has a number of independent non-associated Unitholders who have respectively invested into the Trust for commercial reasons (i.e. to derive prospective returns from profits in the underlying Investee Companies).

Schedule 2F to the ITAA 1936 and tax losses

The concept of a 'fixed entitlement' was originally introduced in the context of the trust loss measures and should primarily be interpreted in that context (in the absence of any express provision or explanatory guidance that indicates a different context is relevant). The trust loss measures are an important integrity measure, removing a structural flaw in the tax system. The concept of a 'fixed entitlement' is fundamental to the structure and effectiveness of the trust loss measures.

The EM to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 states (at paragraph 13.13) in respect of the Commissioner's power in subsection 272-5(3) of Schedule 2F to the ITAA 1936 that:

This provision is to provide for special circumstances where there is a low likelihood of a beneficiary's vested interest being taken away or defeased and, having regard to the scheme of the trusts loss provisions to prevent the transfer of the tax benefit of the losses and other deductions incurred by trusts, it would be unreasonable to treat the beneficiary's interest as not constituting a fixed entitlement.

This passage indicates that when looking at the facts of a case, in the context of the criteria listed in subsection 272-5(3) of Schedule 2F to the ITAA 1936, unless the context of the provision for which fixed entitlement is required provides otherwise, the Commissioner should always have regard to whether the absence of a fixed entitlement, in these circumstances, could result in the trafficking (or transfer) of the tax benefit of any tax losses.

It is noted that:

•         The Trust does have tax losses.

•         The Trust currently does not forecast any deductions to be claimed for bad debts or debt/equity swap losses.

•         The Assumptions included for the purpose of this ruling include that:

­   An arrangement has not been, and will not be, entered into which would result in:

• section 272-35 of Schedule 2F to the ITAA 1936 applying; or
• fraud or evasion.

On balance, it is reasonable to conclude that the transfer of the tax benefit of the tax loss deductions does not constitute a material risk.

Conclusion

As stated above, it is reasonable to conclude, based on the "trust instrument" of the Trust, that for the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, the beneficiaries (Unitholders) of the Trust do not have fixed entitlements to any of the income and capital of the Trust.

However, pursuant to paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936, and after having regard to the requirements of subparagraphs 272-5(3)(b)(i), (ii) and (iii) and submissions from the applicant, it is submitted that it is appropriate that the Unitholders of the Trust should be treated as having fixed entitlements to all of the income and capital of the Trust for the relevant income years.

In summary, as:

•         the trust instrument (being the Trust Deed) contains powers which have not been used to defease the interests of the beneficiaries in the income or capital of the Trust;

•         the likelihood of defeasance is low;

•         the requirements of safe harbour 6 in paragraph 54 of PCG 2016/16 are satisfied for the entire retrospective aspect of the Ruling Period and are expected to be (according to the facts and assumptions) satisfied in respect of the prospective portion of the Ruling Period; and

•         there is little likelihood that a tax benefit of the Trust will be transferred,

it is reasonable for the Commissioner to exercise the discretion under subsection 272-5(3) of Schedule 2F to the ITAA 1936 to treat all of the Unitholders of the Trust as having a fixed entitlement to a share of the income and capital of the Trust for the relevant income years.

Issue 2

Question 2

Summary

The terms of the trust instrument do not provide the beneficiaries with a vested and indefeasible interest in so much of the corpus of the Trust as is comprised by the trust holding, for the purposes of former subsection 160APHL(11) of the ITAA 1936. However, the Commissioner considers that it is reasonable to exercise the discretion in former subsection 160APHL(14) of the ITAA 1936 to treat the Unitholders of the Trust as having a vested and indefeasible interest in so much of the corpus of the Trust as is comprised by the trust holding.

Detailed reasoning

A "fixed interest" in the trust holding is defined in former subsection 160APHL(11) of the ITAA 1936 as "a vested and indefeasible interest in so much of the corpus of the trust as is comprised by the trust holding." [emphasis added]

Is there an 'interest in so much of the corpus of the trust as is comprised by the trust holding'?

Former section 160APHL provides that in calculating the extent of a beneficiary's interest, it is necessary to distinguish between the interest of a beneficiary in shares held by a widely-held trust (as defined below), and the interest of a beneficiary in shares held by other trusts.

The Trust is not a 'widely held trust' for the purposes of former section 160APHD of the ITAA 1936.

This necessitates that a 'look through' approach will be required to determine the interest that a beneficiary has in each of the underlying shares in the Trust [refer to paragraphs 4.26, 4.77 and 4.88 of the EM with accompanied the Taxation Laws Amendment Bill (No. 2) 1999.]

Although the method of calculating the interest that a beneficiary has in the trust holding differs as between widely-held trusts and trusts other than widely-held trusts, the beneficiaries of both types of trusts do have an interest in the trust holding.

As discussed above it is accepted that the Trust Deed provides Unitholders with a vested interest in the capital of the Trust under clause G of the Trust Deed.

Clause X of the Trust Deed effectively defines 'Assets' as any asset or property held by or on behalf of the Trustee on trust for the Unitholders. As such, any shares held by the Trustee of the Trust would constitute form a part of the capital of the Trust which equates to the 'corpus' of the trust for current purposes.

Clause XA of the Trust Deed relevantly provide that, '...each Unit confers on the holder of that Unit undivided beneficial interest in the Assets as a whole, subject to the Liabilities ... and a Unit does not confer an interest in a particular Asset...'

The undivided equitable interest in the Assets that Unitholders have constitutes the requisite interest in the corpus of the Trust as is comprised by the trust holding for current purposes.

Further, interests of the Unitholders are not contingent. That is, the Trust is not a discretionary trust or a trust with default capital beneficiaries - such that, no beneficial interest in the capital of the trust is capable of being defeated, partly or wholly, by the exercise of a power of appointment of capital by the Trustee or other donee.

No vested and indefeasible interest

We consider the effect of the High Court's judgement in CPT Custodian case is that it is not possible for a beneficiary of the rust to have a Fixed Interest for the purposes of former subsection 160APHL(11) of the ITAA 1936. This is because a trustee's indemnity results in the trustee having an interest in the trust's property.

Therefore, it follows that the Holders of the Trust do not have a vested and indefeasible interest in so much of the corpus (capital) of the Trust as is comprised by the trust holding.

It has already been determined above, that the Unitholders of the Trust do have a vested interest in a share of the capital of the Trust but not an indefeasible interest in a share of the capital of the trust, i.e. an interest in a share (or proportion) of all of the capital of the trust. (Note: The terms 'corpus' and 'capital' are considered to be synonymous for current purposes.)

Therefore, it follows that the Unitholders of the Trust do not have a vested and indefeasible interest in so much of the corpus (capital) of the Trust as is comprised by the trust holding.

In view of the conclusion above that the beneficiaries (Unitholders) of the Trust do not have a vested and indefeasible interest in so much of the corpus (capital) of the Trust as is comprised by the trust holding (being the Trustee's ownership of shares) pursuant to former subsection 160APHL(11) of the ITAA 1936, the only way that the beneficiaries can have such a vested and indefeasible interest is if the Commissioner exercises the discretion in former subsection 160APHL(14).

Former subsection 160APHL(14) of the ITAA 1936 contains a discretion, whereby in cases where beneficiaries do not have a vested and indefeasible interest in so much of the corpus of the trust as is comprised by the trust holding, the Commissioner may determine that the interest is to be taken to be vested and indefeasible.

The requirements to be satisfied in respect of the discretion are contained in former subsections 160APHL(14)(a), (b) and (c) of the ITAA 1936.

In terms of former paragraph 160APHL(14)(a) -

The taxpayer has an interest in so much of the corpus of the trust as is comprised by the trust holding:

As discussed above, it is accepted that the taxpayer has an interest in so much of the corpus of the Trust as is comprised by the trust holding.

In terms of former paragraph 160APHL(14)(b) -

Apart from this subsection, the interest would not be a vested or indefeasible interest:

As discussed above, although a Unitholder's interest in the capital of the Trust is vested, the Trust Deed of the Trust contains certain clauses by which a Unitholder's interest in a share of the capital of the Trust may be defeased.

Clause A Issue of Units

Clause A provides that additional Units may be issued.

Clause B requires that additional Units are issued on the basis of the NAV of the Trust according to Australian accounting principles.

This will satisfy the requirements of the 'savings rule' in former paragraph 160APHL(13)(d) of the ITAA 1936 such that the ability to issue additional Units by the Trustee will not constitute a defeasible power.

Clause C Redemption of Units

Clause C provides that Units may be redeemed at the request of a Unitholder.

Clause C also provides that Units must be redeemed on the basis of the NAV of the Trust according to Australian accounting principles.

This will satisfy the requirements of the 'savings rule' in former paragraph 160APHL(13)(d) of the ITAA 1936 such that the ability to redeem Units by the Trustee will not constitute a defeasible power.

Clause D Amendments to this Deed

As discussed above, the ability for the Trustee to amend the Trust Deed constitutes a defeasible power.

In terms of former paragraph 160APHL(14)(c) -

Having regard to the factors prescribed in former paragraph 160APHL(14)(c):

These factors are:

(i) the circumstances in which the interest is capable of not vesting or the defeasance can happen; and

(ii) the likelihood of the interest not vesting or the defeasance happening; and

(iii) the nature of the trust; and

(iv) any other matter the Commissioner thinks relevant.

In respect to the power to amend the Trust Deed under clause D the comments made above in relation to subsection 272-5(3) apply here.

Other matters

The discretion in former subsection 160APHL(14) of the ITAA 1936 relates to the utilisation of a tax offset for a share of the franking credit on a franked distribution. It was introduced as a part of integrity measures aimed at defeating franking credit trading schemes.

The Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 2) 1999, which accompanied the introduction of former subsection 160APHL(14), outlined the purpose of those integrity measures:

4.6 One of the underlying principles of the imputation system is that the benefits of imputation should only be available to the true economic owners of shares, and only to the extent that those taxpayers are able to use the franking credits themselves: a degree of wastage of franking credits is an intended feature of the imputation system.

4.7 In substance, the owner of shares is the person who is exposed to the risks of loss and opportunities for gain in respect of the shares. However, franking credit trading schemes allow persons who are not exposed, or have only a small exposure, to the risks and opportunities of share ownership to obtain access to the full value of franking credits, which often, but for the scheme, would not have been used at all, or would not have been fully used. Some of these schemes may operate over extended periods, and typically involve a payment related to the dividend which has the effect of passing its benefit in economic terms to a counterparty. The schemes therefore undermine an underlying principle of imputation.

In exercising the discretion, the Commissioner must ensure that the purpose of the integrity measures is not undermined.

The purpose of the integrity measures will not be undermined due to the inclusion of the Assumptions for the purpose of this ruling.

Conclusion

It has already been determined, above, that the Commissioner should exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 so that the Unitholders of the Trust will be treated as having a fixed entitlement to (being a vested and indefeasible interest in) all of the capital of the Trust.

The factors in former paragraph 160APHL(14)(c) are identical, mutatis mutandis, to the factors in paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936, except for an additional factor in subparagraph (iv) of former paragraph 160APHL(14)(c).

The saving rule in former subsection 160APHL(13) of the ITAA 1936 is identical, mutatis mutandis, to the saving rule in subsection 272-5(2) of Schedule 2F to the ITAA 1936.

Also, the assumptions made in relation to this ruling application include that throughout the Ruling Period:

•         Only one class of Units will be on issue in the Trust.

•         Any further Units in the Trust will be issued in accordance with the savings rules in subsection 272-5(2) of Schedule 2F to the ITAA 1936 and former subsection 160APHL(13) of the ITAA 1936.

•         The Trustee will not exercise a power capable of defeating a Unitholder's interest to defeat a Unitholder's interest in the income or capital of the Trust.

•         An arrangement has not been, and will not be, entered into which would result in:

­   section 272-35 of Schedule 2F to the ITAA 1936 applying;

­   a 'related payment' under former section 160APHN of the ITAA 1936;

­   a Unitholder having materially diminished risks of loss or opportunities for gain of less than 30% in respect of shares held by the Trustee of the Trust (refer to former section 160APHM of the ITAA 1936);

­   a Unitholder not being sufficiently exposed to the risk of loss or opportunity for gain in respect of the shares held by the Trustee as explained by ATO Interpretative Decision ATO ID 2014/10;

­   the Commissioner making a determination under paragraph 177EA(5)(b) of the ITAA 1936;

­   any of paragraphs 207-150(1)(c) to (h) of the ITAA 1997 (inclusive) applying; or

­   fraud or evasion.

Therefore, the Commissioner will exercise the discretion in former subsection 160APHL(14) of the ITAA 1936 to treat the Unitholders of the Trust as having a vested and indefeasible interest in so much of the corpus (capital) of the Trust as is comprised by the trust holding.