Tax & general law

Carter v FCT [2020] FCAFC 150

Gummow J once singled out tax officers as needing to better understand the general law against which tax disputes often play out12.  This trusts case may illustrate the point.  It was argued that disclaimer of a present entitlement in a later year was ineffective.  In a payroll tax context, it had been held that a later private agreement had no impact on the tax law13.

The court pointed out that trusts concepts in Div 6 of ITAA36 take their general law meaning, however, and that disclaimer of an entitlement involves no disposal14.  Nothing in the tax legislation contradicted this.  It followed (at [110]) that the tax consequences were determined by the general law of trusts15.

This principle is from Episode 68 of interpretation NOW!

Footnotes:

12 Gummow (2014) 37 Melbourne University Law Review 834 (at 835).

13 Smeaton [2017] NSWCA 184 (at [104]), McDonald [2001] FCA 305 (at [20]).

14 Bamford [2010] HCA 10 (at [37]), Paradise [1968] 2 All ER 625 (at 632).

15 Thomas [2018] HCA 31 (at [54]), cf Executor (1939) 62 CLR 545 (at 563).