In an interlocutory matter, the AAT has held that a taxpayer was at all relevant times a beneficiary of a trust estate and that an amended assessment issued in April 2010 for the 2005 tax year was issued within time – that is, within 4 years pursuant to Item 4 of s 170(1) of the ITAA 1936.
The taxpayer lodged his 2005 tax return in April 2006 disclosing a nil amount under the Label “Distributions from trusts”. The original assessment was issued on 18 April 2006. However, on 12 April 2010, the Commissioner issued an amended assessment, which included an additional $2.1m for the 2005 tax year. The Tribunal noted during the 2005 tax year, a distribution of trust income was allocated to the taxpayer’s wife with the remainder allocated to a company, but none was allocated to the taxpayer. The Tribunal also noted the trust deed defined “Father” in the “Eligible Classes” to mean the taxpayer.
The taxpayer argued that as he had received no distributions in relation to the 2005 tax year, he was not a beneficiary of the trust estate at any time in that year and therefore the amended assessment was out of time.
The Commissioner contended that as the taxpayer was a member of the Eligible Class, the taxpayer was a beneficiary of the trust estate during the whole of the 2005 tax year, and accordingly, the amended assessment was within time.
The issue for determination was whether the taxpayer was “a beneficiary of a trust estate at any time” in the 2005 tax year as those words are used in qualification (d) of Item 1 of s 170(1). If so, the Commissioner’s power to issue amended assessments can be extended from 2 years to 4 years by Item (1)(d). The Tribunal rejected the arguments raised by the taxpayer. It held the taxpayer was at all relevant times a beneficiary under the trust, and that the amended assessment was timely by operation of Item (1)(d) of s 170(1).
(AAT Case [2012] AATA 477, Re Yazbek and FCT, AAT, Ref Nos: 2010/4020-4022, Deutsch DP, 25 July 2012).
[LTN 144, 27/7]