Private ruling: Deemed fixed entitlements
Date of advice: 23 March 2026
Published: 9 June 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do the Unitholders of the Trust have fixed entitlements to the income and capital of the Trust (fixed entitlements) for the purposes of subsections 272-5(1) and 272-5(2) of Schedule 2F to the ITAA 1936? | A1: No. | Q2: If the answer to Question 1 is "No", will the Commissioner exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 to deem the Unitholders of the Trust as having fixed entitlements? | A2: Yes.

Relevant facts and circumstances: 1. The Trust is a unit trust pursuant to the Trust Deed. 2. The Trustee of the Trust is Company A (the Trustee), a resident of Australia for tax purposes. 3. The Trust is a syndicate investment vehicle for unrelated investors for the purpose of owning and leasing a commercial office building (the Property). 4. The Trust is a "management investment trust" (MIT) for the purposes of section 275-10 of the ITAA 1997. The Trustee holds an Australian Financial Services License. 5. The directors of the Trustee are Australian residents for tax purposes. 6. The Trustee is not a trustee for any other trust and has no other activities other than operating as trustee for the Trust. 7. The Trust currently has two classes of units, being Ordinary Units and Unit X. 8. The Trustee and the Unitholders deal with each other at arm's length in relation to the Trust. 9. There has been no change in Unit holdings since establishment of the Trust. The Trust Deed Power to issue Units 10. Clause X of the Trust Deed provides the Trustee the full and complete power to issue, acquire, dispose, redeem and cancel units. 11. Clause X of the Trust Deed provides that, if the Trustee issues further Units in the Trust, the Issue Price must be calculated on the basis of X. 12. No new Units have been issued since the establishment of the Trust. Partly paid Units 13. Clause X of the Trust Deed provide that the "Issue Price" for any Units issued may be payable by instalments. 14. Clause X of the Trust Deed provide that, if a Partly Paid Unit is forfeited, the Trustee can dispose of it at its discretion. 15. No Partly Paid Units have been issued and, accordingly, no Partly Paid Units have ever been forfeited. Power to redeem Units 16. Clause X of the Trust Deed gives the Trustee the full and complete power to redeem Units at its discretion. 17. Clause X of the Truste Deed provides that a Unitholder may request the Trustee to redeem any Units from the Trust. 18. Clause X of the Trust Deed provides that the Withdrawal Price must be calculated based on X. 19. Clause X of the Trust Deed states that, subject to the law, the Trustee may in its absolute discretion at any time redeem some or all of the Units of any Unitholders regardless of whether or not the Trustee has received a withdrawal request in respect of those Units. 20. No Units have been compulsorily sold or redeemed since the establishment of the Trust. Power of Amendment 21. Clause X of the Trust Deed provides that the Trust Deed may be modified, repealed or replaced if authorised by Special Resolution of the Members, or by the Trustee if the Trustee reasonably considers the change will not adversely affect Unitholders' rights. 22. Clause X of the Trust Deed defines a "Special Resolution" as a resolution which is passed by "at least 80% of the Unitholders entitled to vote on the Resolution". 23. No amendments have been made to the Trust Deed and there is no intention to amend the Trust Deed prior to the end of the Ruling Period. Unitholders' rights 24. Ordinary Unitholders are entitled to 100% of the income of the Trust in accordance with their respective unit holdings, unless Event X occurs. 25. Ordinary Unitholders are entitled to 100% of the capital of the Trust in accordance with their respective unit holdings, unless Event X occurs. 26. If an Event X occurs, entitlement to income and/or capital of the Trust is to be distributed as X. Activities of the Trust 27. No Event X has occurred since the establishment of the Trust. 28. As of income year ended 30 June 20XX, the Trust had $X of tax losses carried forward. 29. $X of tax losses are expected to be recouped in the 20XX income year. 30. No deductions are forecasted to be claimed for bad debts or debt/equity swap losses in respect of the 20XX income year. 31. No arrangement has been or is expected to be entered into which would result in: • Section 272-35 of Schedule 2F to the ITAA 1936 having application; • The trafficking of the tax benefit of a tax loss, bad debt deduction or debt/equity swap deduction; or • Fraud or evasion. Assumptions

Relevant legislative provisions: Income Tax Assessment Act 1936 Schedule 2F | Income Tax Assessment Act 1936 section 272-5 of Schedule 2F | Income Tax Assessment Act 1936 subsection 272-5(1) of Schedule 2F | Income Tax Assessment Act 1936 subsection 272-5(2) of Schedule 2F | Income Tax Assessment Act 1936 subsection 272-5(3) of Schedule 2F | Income Tax Assessment Act 1936 section 272-35 of Schedule 2F | Income Tax Assessment Act 1936 section 272-65 of Schedule 2F

Reasons for decision: Summary: The Unitholders of the Trust do not have fixed entitlements to the income and capital of the Trust pursuant to subsections 272-5(1) and 272-5(2) of Schedule 2F to the ITAA 1936. | Detailed Reasoning - Detailed reasoning: A 'fixed trust' is defined in subsection 995-1(1) of the ITAA 1997, and section 272-65 of Schedule 2F to the ITAA 1936. That definition provides that: A trust is a fixed trust if persons have fixed entitlements to all of the income and capital of the trust. The definition of 'fixed entitlement' in subsection 995-1(1) of the ITAA 1997 provides that 'an entity has a fixed entitlement to a share of the income or capital of a trust if the entity has a fixed entitlement to that share within the meaning of Division 272 in Schedule 2F to the Income Tax Assessment Act 1936 .' Subsection 272-5(1) of Schedule 2F to the ITAA 1936 provides that: If, under a trust instrument, a beneficiary has a vested and indefeasible interest in a share of income of the trust that the trust derives from time to time, or of the capital of the trust, the beneficiary has a fixed entitlement to that share of the income or capital. In addition, subsection 272-5(2) states that: If: (a) a person holds units in a unit trust; and (b) the units are redeemable or further units are able to be issued; and (c) if units in the unit trust are listed for quotation in the official list of an approved stock exchange - the units held by the person will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and (d) if the units are not listed as mentioned in paragraph (c) - the units held by the person will be redeemed, or any further units will be issued, for a price determined on the basis of the net asset value, according to Australian accounting principles, of the unit trust at the time of the redemption or issue; then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the person's interest, as a Unitholder, in the income or capital of the unit trust is defeasible. | Detailed Reasoning - Meaning of the words 'vested and indefeasible': The terms 'vested and indefeasible' are not defined in the ITAA 1936 or ITAA 1997. The Explanatory Memorandum to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 (EM) discusses the nature of a 'vested interest': 13.4 A person has a vested interest in something if the person has a present right relating to the thing. Stated simply, a vested interest is one that is bound to take effect in possession at some point in time. A vested interest is to be contrasted with a 'contingent' interest which may never fall into possession. If an interest of a beneficiary in income or capital is the subject of a condition precedent, so that an event must occur before the interest becomes vested, the beneficiary does not have a vested interest to the income or capital since such an interest is instead 'contingent' upon the event occurring. 13.5 In traditional legal analysis, a person can be said to be either 'vested in possession' or 'vested in interest'. A present interest, i.e. one that is being enjoyed, is said to be 'vested in possession'; a future interest, i.e. one which gives its holder a present right to a future enjoyment, is said to be a 'vested interest'. A person is vested in possession where the person has a right to immediate possession or enjoyment of the thing in question. In the definition of fixed entitlement, 'vested' includes both vested in possession and vested in interest. 13.6 Because vested interests include future interests, a person can have a vested interest in a thing even though the person's actual possession and enjoyment of the thing is delayed until some time in the future. This is reflected in paragraph 13 of the Practical Compliance Guideline PCG 2016/16 Fixed entitlements and fixed trusts (PCG 2016/16): 13. In terms of the concept of 'fixed entitlement', an interest is 'vested' if it is vested in interest or vested in possession. An interest is vested in possession when it gives its holder a right of present enjoyment, whereas an interest is vested in interest if it gives its holder a present right to future enjoyment. The term 'indefeasible' is not defined in the tax legislation, however, broadly speaking, an interest is generally indefeasible where it 'cannot be terminated, invalidated or annulled' (see Colonial First State Investments Limited v Commissioner of Taxation [2011] FCA 16, paragraph [97]). The EM also addresses when a vested interest is indefeasible: 13.7 A vested interest is indefeasible where, in effect, it is not able to be lost. A vested interest is defeasible where it is subject to a condition subsequent that may lead to the entitlement being divested. A condition subsequent is an event that could occur after the interest is vested that would result in the entitlement being defeated, for example, on the occurrence of an event or the exercise of a power. For example, where a beneficiary's vested interest is able to be taken away by the exercise of a power by the trustee or any other person, the interest will not be a fixed entitlement. PCG 2016/16 further explains where a vested interest may become defeasible: 15. An interest is defeasible if it can be defeated by the actions of one or more persons or by the occurrence of one or more subsequent events. An interest of a default beneficiary in the income or capital of the trust is an example of a defeasible interest. 16. Powers in modern trust instruments which cause a beneficiary's interests to be defeasible include: • Broad powers to amend the trust instrument. • Powers to issue new units after the trust is settled, or to redeem existing units. • A power to reclassify existing units so that they do not all have equal rights to receive the income and capital of the trust. • A power to classify receipts as being on income or capital account where the units that have been issued do not all have the same rights to receive the income and capital of the trust. • A power to appoint a beneficiary's interest in the income or capital of the trust to another beneficiary. • A power to settle or appoint any part of the corpus of the trust to a new trust with different beneficiaries. • A power to enforce the forfeiture or cancellation of partly paid units due to the non-payment of a call except where such partly paid units would be void ab initio. 'Vested and indefeasible', in the context of Schedule 2F to the ITAA 1936, has not been judicially considered other than in the limited context of amending the constitution of a registered MIS under section 601GC of the Corporations Act 2001 : see Colonial First State Investments Ltd v. Commissioner of Taxation [2011] FCA 16; (2011) 192 FCR 298; 81 ATR 772; ATC 20-235. | Detailed Reasoning - Application to the Trust: It is an essential element of subsection 272-5(1) of Schedule 2F to the ITAA 1936 that, in order to have a fixed entitlement to a share of income or capital, there must be a vested or indefeasible interest 'under a trust instrument'. The determining factor in deciding whether fixed entitlements exist will be the terms of the trust instrument under which the trust is constituted. Neither the form of the trust nor the labels that are attached to it can determine this question. For the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, the Commissioner accepts that a 'trust instrument' includes: ...a deed or constitution as supported by documentation such as a Product Disclosure Statement, Investment Memorandum or other document that modifies or supplements the terms of the trust set out in the deed or constitution. For the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, the trust instrument is the Trust Deed of the Trust. | Detailed Reasoning - Vested interest: For the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, it is accepted that the Trust Deed provides beneficiaries who are Ordinary Unitholders with a vested interest in the income and capital of the trust on the basis that: • The Trust Deed at Clause X provides that Ordinary Unitholders are entitled to the income of the Trust in accordance with their perspective unit holdings, subject only to payments of proper expenses by and of the Trustee relating to the administration of the Trust, unless Event X occurs. • The Trust Deed at Clause X provides that Ordinary Unitholders are entitled to a proportionate share of the property of the Trust or the net proceeds of the property of the Trust on winding up, unless Event X occurs. The Unitholders of Unit X have contingent interest in the income and capital of the Trust until Event X occurs. | Detailed Reasoning - Indefeasible interest: For the purposes of subsection 272-5(1) of Schedule 2F to the ITAA 1936, the fact that a power held by the Trustee has not yet been exercised is not relevant when determining if the power results in an interest being defeasible [see Colonial First State Investments Ltd v Commissioner of Taxation [2011] FCA 16; (2011) 192 FCR 298; 81 ATR 772; 2011 ATC 20-235]. The key question is whether, if exercised, the power could defeat some or all of the beneficiaries' rights to the income and/or capital of the trust. In accordance with paragraph 16 of PCG 2016/16, the Unitholders do not have an indefeasible interest under the Trust Deed for reasons including: • The Trustee's broad power under Clause X of the Trust Deed to amend the Trust Deed if the Trustee reasonably considers the change will not adversely affect Unitholders' rights. The Trustee can also amend without unanimous beneficiary approval. • The Trustee's power under Clause X of the Trust Deed to issue or redeem existing units. Clause X of the Trust Deed states that, subject to the law, the Trustee may in its absolute discretion at any time redeem some or all of the Units of any Unitholder regardless of whether or not the Trustee has received a withdrawal request in respect of those Units. • The Trustee's power to enforce the forfeiture of partly paid units due to the non-payment of a call (pursuant to Clause X of the Trust Deed). | Detailed Reasoning - Savings Rule: A trust can both rely on the 'savings rule' in subsection 272-5(2) of Schedule 2F to the ITAA 1936 (which explains certain conditions where units that are redeemable will not be considered defeasible) in relation to some trustee powers (th e power to issue or redeem units), and request that the Commissioner exercise the discretion in the context of other powers that may defeat a beneficiary's interest (such as in relation to a power to amend). The savings rule does not apply to the power to amend a trust deed without unanimous beneficiary approval. Clause X of the Trust Deed provides that the Trust Deed may be modified, repealed or replace by Special Resolution of the Unitholders, which is defined as at least 80% of the Unitholders entitled to vote. | Detailed Reasoning - Conclusion: The Unitholders of the Trust do not have fixed entitlements to the income and capital of the Trust as defined in subsections 272-5(1) and 272-5(2) of Schedule 2F to the ITAA 1936 because the Trust Deed contains several clauses, which cause beneficiary's interest to be defeasible. Accordingly, the Trust is not a 'fixed trust'. | Detailed Reasoning - Question 2: If the answer to Question 1 is "No", will the Commissioner exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 to deem the Unitholders of the Trust as having fixed entitlements? | Summary: Having regard to the relevant factors in paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936, the Commissioner will exercise the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936 to treat the Unitholders of the Trust as having fixed entitlements to the income and capital of the Trust. | Detailed Reasoning - Detailed reasoning: As stated above in Question 1, the Trust is not a fixed trust. Therefore, the Trust can be treated as a 'fixed trust' by the Commissioner exercising the discretion in subsection 272-5(3) of Schedule 2F to the ITAA 1936. Subsection 272-5(3) of Schedule 2F to the ITAA 1936 contains a discretion, whereby in cases where beneficiaries do not have a fixed entitlement, the Commissioner may, for the purposes of the Act, treat such beneficiaries as having a fixed entitlement where it is reasonable to do so based upon the factors prescribed in paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936. Paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936 stipulates that the Commissioner may treat a beneficiary as having a fixed entitlement (in cases where in fact beneficiaries do not have a fixed entitlement) by having regard to key matters that the Commissioner takes into account in deciding whether to exercise the discretion. That provision states: (3) If: (a)a beneficiary with an interest in a share of income that the trust derives from time to time, or of the capital of a trust, does not have a fixed entitlement to the share; and (b)the Commissioner considers that the beneficiary should be treated as having the fixed entitlement, having regard to: (i)the circumstances in which the entitlement is capable of not vesting or the defeasance can happen; and (ii)the likelihood of the entitlement not vesting or the defeasance happening; and (iii)the nature of the trust; the beneficiary has the fixed entitlement. PCG 2016/16 provides factors favourable for when exercising the discretion: 55. The Commissioner regards the following factors favourably when deciding whether to exercise the discretion: • a trustee or manager has never exercised a power capable of defeating a beneficiary's interest to defeat a beneficiary's interest in the income or capital of the trust • commitments are made in unit holder agreements, Product Disclosure Statements or other documents with legal consequences that the trustee or manager will not exercise a power capable of defeating a beneficiary's interest at all, or in a way that is adverse to the rights of beneficiaries to receive the income and capital of the trust • all beneficiaries have the same rights to receive the income and capital of the trust • the trust instrument can only be amended with the unanimous (100%) approval of all the beneficiaries • although the trust instrument can be amended without the unanimous approval of beneficiaries, the approval percentage calculated on the current interest or unit holdings of beneficiaries effectively means that all beneficiaries must approve any amendment (for example, where the approval of 75% of unit holders is required to make the amendment and the smallest unit holding is more than 25% of the units) • the trust instrument has been amended in accordance with section 601GC of the Corporations Act 2001 (so as to assist with the efficient administration of the trust) but no beneficial interests in the income and capital of the trust are adversely affected • the beneficiaries whose rights to receive the income and capital of the trust have been adversely affected by the exercise of a power capable of defeating a beneficiary's interest have explicitly consented to that specific act (such as upon the redemption of the interests of an employee not covered by the savings rule upon the cessation of employment) • the trustee or manager deals with the beneficiaries of the trust on an arm's length basis • the trust is governed by a foreign law that is similar to Chapter 5C of the Corporations Act 2001, and • the trust would satisfy the basic and specific conditions (as applicable to the type of trust) for access to a safe harbour. The factors unfavourable to the exercise of the discretion include: 56. The Commissioner regards the following factors unfavourably when deciding whether to exercise the discretion: • a trustee or manager exercises a power to defeat beneficiaries' interests in the income or capital of the trust, however: - the nature of the power that is exercised will be important, for example, compulsorily redeeming units where a unit holder's stake is less than a minimum specified in the trust instrument, and the unit holder receives the redemption price of those units, is unlikely to preclude the exercise of the discretion - where external factors (such as those in the Global Financial Crisis) temporarily affect the ability of the trustee or manager to fund distributions or redemptions, this is unlikely to preclude the exercise of the discretion (for example, a temporary wholesale freezing or deferral of interests) • there are significantly different beneficiaries of the trust in an income year for which an entity seeks to have a fixed entitlement, than the beneficiaries of the trust in the income year(s) in which the trust made a tax loss, or incurred a bad debt deduction or debt/equity swap deduction • an arrangement has been entered into which would result in: (a) section 272-35 having application (b) the trafficking of the tax benefit of a tax loss, bad debt deduction or debt/equity swap deduction, or (c) fraud or evasion. | Detailed Reasoning - Application to the Trust: Paragraph 272-5(3)(a) of Schedule 2F to the ITAA 1936 The Trust Deed provides the Unitholders with interests in a share of the income that the Trust derives from time to time and/or a share of the capital of the Trust, but the Unitholders do not have a fixed entitlement to the share of income and capital in the Trust. As a result, paragraph 272-5(3)(a) of Schedule 2F to the ITAA 1936 is satisfied. Subparagraph 272-5(3)(b)(i) of Schedule 2F to the ITAA 1936 PCG 2016/16 explains what circumstances to consider when applying this subparagraph: 29. When examining the circumstances in which a beneficiary's interest is capable of not vesting or being defeated, the Commissioner will have regard to any factor that may affect the defeasance of any beneficiary's interest, including: • the number of circumstances of potential defeasance, and • the significance of those circumstances. 30. This includes having regard to: • any person who is capable of altering the beneficiary's interest • the nature of their relationship to the beneficiary, and • any limitation on their capability to so alter that interest. The circumstances in which the Unitholders' entitlement is capable of being defeated are numerous (as noted in response to question 1). These circumstances are: • Power to amend: the Trust Deed may be modified, repealed or replaced if authorised by Special Resolution of the Unitholders, or by the Trustee if the Trustee reasonably considers the change will not adversely affect Unitholders' rights. The Trustee has ability to amend the Trust Deed with the consent of the unitholders by way of Special Resolution or when it will not prejudice their rights. • Issue and redemption of Units: The Trustee's ability to issue further units and to redeem existing units. • Enforcement of partly paid units: The Trustee's ability to enforce the forfeiture of partly paid units due to the non-payment of a call. No Partly Paid Units have been issued and, accordingly, no Partly Paid Units have ever been forfeited. Subparagraph 272-5(3)(b)(ii) of Schedule 2F to the ITAA 1936 When considering the likelihood of the interest not vesting or being defeated, the Commissioner must form a view as to the probability that the contingency or defeasance will happen. Despite the numerous circumstances in which the Unitholders' entitlement is capable of being defeated, the likelihood of their entitlement being defeated is relatively low. This is considered so on the basis that none of the powers available to the Trustee that are capable of defeating a Unitholder's entitlement under the Trust have been exercised or are intended to be exercised. The Trustee has never exercised these powers under the Trust Deed, and will not do so for the Ruling Period to defeat a unitholder's interest in the income or capital of the Trust. Consequently, the Commissioner would accept that the likelihood of the beneficiaries' interests in the income and capital of the Trust being defeated would be low. Subparagraph 272-5(3)(b)(iii) of Schedule 2F to the ITAA 1936 The nature of the trust refers to its basic legal characteristics and its economic function, both actual and intended. Under paragraph 34 of PCG 2016/16, the ability of the trustee or manager of the trust to adversely affect the interests of beneficiaries could be limited where: • additional responsibilities are placed on the trustee by legislation, most commonly as a registered managed investment scheme under Chapter 5C of the Corporations Act 2001 ; • contractual restrictions limit the trust manager's access to trust assets; • the trust is subject to industry regulations, licensing or registration requirements, which are legally enforceable, such as the Australian Securities Exchange (ASX) Listing Rules which are enforceable against listed entities and their associates (sections 793C and 1101B of the Corporations Act 2001 ); • commitments are made in a product disclosure statement, investment memorandum or other document to exercise powers in a particular (restrictive and/or non-adverse) way; • the trust deed restricts the ability of the trustee to issue and redeem units at anything other than market value or other values approximating net asset value, or • the unanimous (100%) approval of the beneficiaries is required prior to the exercise of a power capable of defeating a beneficiary's interest by the trustee or manager. In relation to the nature of the trust , the following is considered relevant in considering whether to exercise the discretion: • The purpose of establishing the Trust is to allow the unitholders to derive income/profits from the investments made by the Trust. • The Trust is a unit trust with two classes of units on issue to unrelated investors. The Trust Deed is drafted with the intent for Ordinary Unitholders and Unit X Unitholders to have defined rights to income and capital in accordance with the underlying performance of the property of the Trust. • The Trust is a unit trust with its sole activity being the ownership of property to derive income and capital growth for its investors, and the Trustee deals at arm's length with the Unitholders of the Trust. • The Unitholders have not changed since the establishment of the Trust with no additional Units expected to be issued to the remainder of the Ruling Period: - The Unitholders that will benefit from the recoupment of the tax losses in 20XX income year were Unitholders of the Trust when the losses were made; and - It is expected that the Unitholders that will benefit from the recoupment of losses will be the Unitholders of the Trust when the losses were or are made, during the entirety of the Ruling Period. | Detailed Reasoning - Losses: The concept of a 'fixed entitlement' was originally introduced in the context of the trust loss measures and should primarily be interpreted in that context (in the absence of any express provision or explanatory guidance that indicates a different context is relevant). The trust loss measures are an important integrity measure, removing a structural flaw in the tax system. The concept of a 'fixed entitlement' is fundamental to the structure and effectiveness of the trust loss measures. The EM to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 states (at paragraph 13.13) in respect of the Commissioner's power in subsection 272-5(3) of Schedule 2F to the ITAA 1936 that: This provision is intended to provide for special circumstances where there is a low likelihood of a beneficiary's vested interest being taken away or defeated and, having regard to the scheme of the trusts loss provisions to prevent the transfer of the tax benefit of losses and other deductions incurred by trusts, it would be unreasonable to treat the beneficiary's interest as not constituting a fixed entitlement. This indicates that when looking at the facts of a case, in the context of the criteria listed in subsection 272-5(3) of Schedule 2F to the ITAA 1936, unless the context of the provision for which fixed entitlement is required provides otherwise, the Commissioner should always have regard to whether the absence of a fixed entitlement, in these circumstances, could result in the trafficking (or transfer) of the tax benefit of any tax losses. In relation to the circumstances pertaining to the existence of a tax loss, it is noted that the Trustee has stated that no arrangements have been or is expected to be entered into that would result in section 272-35 in Schedule 2F to the ITAA 1936 having application, in the trafficking of the tax benefit of a tax loss, bad debt deduction or debt/equity swap deduction, or in fraud or evasion. | Detailed Reasoning - Conclusion: Having regard to the relevant factors in paragraph 272-5(3)(b) of Schedule 2F to the ITAA 1936, being: • the circumstances in which the entitlement is capable of not vesting or the defeasance can happen; • the likelihood of the entitlement not vesting or the defeasance happening; and • the nature of the trust, and the commentary in PCG 2016/16 more broadly, the Commissioner will exercise the discretion to treat all the units in the Trust as conferring fixed entitlements to a share of the income and capital of the Trust throughout the Ruling Period.

Does IVA apply to this private ruling?: Part IVA of the ITAA 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtain a tax benefit or imputation benefit in connection with an arrangement. | If Part IVA of the ITAA 1936 applies the tax benefit or imputation benefit can be cancelled, for example, by disallowing a deduction that was otherwise allowable. | We have not fully considered the application of Part IVA of the ITAA 1936 to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.