Greensill confirms foreign beneficiaries of a resident discretionary trust are taxable on gains made on non-taxable Australian property. Was the outcome an unintended consequence of the 2011 changes?
For many years, the ATO position has been that s 855-10 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) does not disregard a capital gain distributed to a foreign beneficiary of an Australian discretionary trust.1 More recently, the ATO expressed this position in TD 2019/D6. In summary, the ATO view is that a foreign beneficiary presently or specifically entitled to a capital gain made by an Australian discretionary trust on an asset that is non-taxable Australian property is assessable on the capital gain even though that would not occur if the foreign person made the gain directly, or through a fixed trust, rather than through a discretionary trust. The recent Full Federal Court decision in Peter Greensill Family Co Pty Ltd (trustee) v FCT 2 (Greensill) confirmed the ATO position.
The full presentation is available to Sladen Smart Members sign up/login here to continue reading.
