The income distribution by a trustee of a discretionary trust was successfully challenged by discretionary objects on the basis that the trustee was not sufficiently informed of the circumstances of all the discretionary objects at the time of the distribution. The Supreme Court distinguished a High Court decision which required a more onerous test for a successful challenge.
This is an important case as the majority upheld the principle from the Visy case that a loss is deductible even if it is a one off loss outside of a business operation provided that the loss arose as a result of a business transaction which would have otherwise produced assessable income.
The High Court rejected the Commissioner's view that a person remained a resident of Australia unless he had a permanent home in a foreign country.
A consultation paper will be issued in November 2019 and the final report will be issued in June 2020.
Proposed changes to Testamentary Trusts only apply to transfers of property arising other than by way of will, codicil, intestacy or order of a court