The potential of s100A ITAA36 to address tax avoidance using trusts
On 17 August 2023, Sonali Walpola, Senior Lecturer in the College of Business and Economics at the Australian National University, presented a hybrid seminar on the potential of s100A ITAA36 to address tax avoidance using trusts and why the Full Federal Court’s approach in Guardian should be treated with caution.
Section 100A of the Income Tax Assessment Act 1936 (ITAA36), enacted in 1979, is an important integrity measure in the trusts arena.The provision applies where a beneficiary is made presently entitled to trust income where the economic benefits relating to the present entitlement are enjoyed by another party. Currently, Section 100A ITAA36 is in the spotlight. The Commissioner relied on s100A in two cases which were the subject of Federal Court appeals in 2023—Commissioner of Taxation v Guardian AIT Pty Ltd  FCAFC 3 (Guardian), where the Commissioner was unsuccessful (at least on s100A) and the ‘BBlood’ litigation (B&F Investments (as trustee for the Illuka Park Trust) v Commissioner of Taxation  FCAFC 89), where the Commissioner was successful. It is centrally argued that the Full Court’s approach to s100A in Guardian is overly narrow, and the decision should be treated with caution due to its failure to consider the most authoritative and salient s100A precedents. While the general anti-avoidance rule in Part IVA ITAA36 was successfully used in Guardian, prior case law shows that s100A is the more robust anti-avoidance mechanism in the trusts arena because it is not hindered by problems that have beset Part IVA, including establishing a dominant tax avoidant purpose. This paper highlights that a broad, non-technical approach to s100A was authoritatively laid down in the only High Court decision on s100A, Raftland Pty Ltd v Commissioner of Taxation  HCA 21 (Raftland), but extraordinarily, the Full Court in Guardian does not once discuss or cite Raftland.
View the seminar recording
About the speakers
Sonali Walpola is a Senior Lecturer in the College of Business and Economics at the Australian National University. She teaches taxation law and commercial law. Sonali’s research interests are focussed on tax law and policy, the enforcement of promises at general law, and the approach of common law judges to effecting change in the common law. Sonali’s articles have been published in esteemed journals, including Australian Tax Forum and Oxford University Commonwealth Law Journal. Sonali is the academic supervisor of the ANU Tax Clinic (which provides pro bono tax assistance) and she co-edits Austaxpolicy, the online research outlet of the ANU Tax and Transfer Policy Institute.
Miranda Stewart is Professor of Law at the University of Melbourne Law School where she is Director of the Tax Group and is a Fellow at the Tax and Transfer Policy Institute at the Crawford School of Public Policy, The Australian National University. Miranda was the inaugural Director of the Institute from 2014 to 2017. Miranda has more than 25 years research, practical and leadership experience in tax law and policy in academia, government and the private sector. Miranda engages in research, policy advice and teaching across a wide range of topics including taxation of large and small business entities, not-for-profits and individuals; international taxation and the role of tax in development; reform processes and budget institutions; and gender equality in tax and transfer systems. Miranda has an enduring interest in the resilience, legitimacy and fairness of tax systems to support good government.