Failing to disclaim trust distributions

In The Beneficiary v Commissioner of Taxation [2020] AATA 3136 the Administrative Appeals Tribunal (AAT) considered whether:

  • a trust distribution was effectively disclaimed by the taxpayer; and
  • an application to extend grounds of objection against the relevant income tax assessment (the Amended Assessment) should be granted.

The Commissioner of Taxation (Commissioner) assessed the taxpayer’s income tax liability for 2014 income year on the basis that the taxpayer’s assessable income included a distribution of $80,000 (the Distribution) from a trust (the Trust).

The AAT partially granted the taxpayer’s application to have the grounds of objection extended, and it was accepted by all parties that a disclaimer executed by the taxpayer on 6 April 2018 (Disclaimer) evidenced an unequivocal intention to disclaim the Distribution.

However, the AAT found that that the Disclaimer was not effective as the taxpayer had previously accepted the Distribution. Relevant to this decision was the fact that the taxpayer had included PAYG instalments of $31,248, which were paid by the trustee of the Trust on her behalf, in her tax return for the 2014 income year.

This case provides a number of important reminders:

  • when it comes to disclaiming a distribution from a trust, timing and context are vital;
  • a taxpayer’s objection should be broad, and include all possible grounds of objection; and
  • if the grounds of an objection needs to extend, a timely application to the AAT is vital (if possible, this shouldn’t be left until 8.00 am on the day of the hearing).

The houses agree to extend JobKeeper

On 26 August 2020 the Coronavirus Economic Response Package (Jobkeeper Payments) Amendment Bill 2020 (Bill) was introduced by the House of Representatives. The Bill was passed by both houses and the Coronavirus Economic Response Package (JobKeeper Payments) Amendment Act 2020 (Act) received royal assent on 3 September 2020.

The Act introduces a number of changes, which include:

  • extending the end date for the JobKeeper Scheme to 28 March 2021;
  • changes to the tax secrecy provisions to allow tax officers to disclose otherwise protected information in relation to the JobKeeper Scheme for the purposes of the administration of an Australian law. Such disclosures can only be made for a purpose relating to COVID-19; and
  • extending certain provisions of the Fair Work Act 2009 to align with the extension of the JobKeeper Scheme to 28 March 2021.

While the Act sets out the framework for the extension to the JobKeeper Scheme, organisations will need to stay tuned for the Treasurer’s amendments to the JobKeeper Rules, which set out the functional provisions of the scheme.

Our detailed article can be found here.

Super early release extension

The Government announced earlier this year that it would extend the application period to allow for those negatively affected by the COVID pandemic to access up to $10,000 of their superannuation for the 2020-21 year.

On 3 September 2020 The Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations (No 3) 2020 (the Regulations) were registered which gives effect to the extension of the COVID early release of superannuation.

The deadline for applications to access superannuation on compassionate grounds relating to COVID-19 is now 31 December 2020.

Those who are impacted by COVID-19 and wish to access their superannuation early should note that applications must be made by 11.59 pm Australian Eastern Daylight-saving Time (AEDT) on 31 December 2020.