Topics on preparing timely trust resolutions (3)

Tribunal Decision in Dalby’s Case

The Tribunal considered whether to allow the trustee to amend their objection grounds to include a trust resolution issue. They weighed various factors:

In Favor of Allowing the Amendment:

• The significant financial impact on the trustee if the issue wasn't allowed, as they'd be assessed on the income instead of beneficiaries.
• The importance of the trust resolution to the trustee.

Against Allowing the Amendment:

• The lengthy delay of 15 months between lodging the objection and stating the ground of objection.
• Prejudice to the ATO, as allowing the amendment would leave much of the income untaxed due to expiry of the time limit for assessing beneficiaries.
• The potential unfair advantage to Mr. Dalby's family at the expense of other taxpayers.

Conclusion: The Tribunal decided not to allow the trustee to amend the objection grounds due to the balance of these factors, despite the significance of the trust resolution to the trustee.

Note: The effectiveness of the trust resolution for tax purposes wasn't a relevant factor in the Tribunal's decision. However, if effective for trust purposes, beneficiaries are entitled to the distributed income, meaning the trustee can't accumulate income based on the resolution's perceived ineffectiveness for tax purposes.

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• Topics on preparing timely trust resolutions (1)
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