Taxation Ruling TR 2018/6

What this ruling is about: To the extent it concerns the application of provisions of the tax law, this publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953 . A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this Ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this Ruling if it turns out that it does not correctly state how the relevant provision applies to you.


Ruling: Amending a trust's vesting date: 5. A trust deed will nearly always specify a date on which the interests in the trust vest and contain a clause which specifies the consequence of that date being reached (for example, that the property is to be held from that date for the takers on vesting in equal shares absolutely). This is to ensure that the rule against perpetuities is not breached. The date is commonly labelled in the deed as the 'Vesting Date' or 'Termination Date'. 6. Prior to a trust's vesting, it may be possible for the trustee pursuant to a proper exercise of a valid power under the deed, or a court [1] , to postpone the vesting of the trust by nominating a later date as the new vesting date. A proposed alteration by a trustee without intervention of the court will be subject to any specific requirements in the trust deed about how and when any alteration to the vesting date can occur. 7. Determining whether the trustee has the power to amend the deed to change the vesting date requires a careful consideration of the terms of the trust deed. For example, although a trustee may have a general power to amend the deed, there may also be specific exclusions from the scope of that power. The power might also be limited to permitting the trustee to bring forward the date on which the trust vests and not permit extending that date. 8. However once the vesting date has passed, the trust has vested and it is no longer possible for a trustee to change the vesting date. Specifically, once the trust has vested, the interests in the trust property become fixed at law. This result cannot be avoided by the parties continuing to carry on as though the trust had not vested or by a purported exercise by the trustee of a power to vary the deed. [2] Further, neither a mistaken assumption that discretionary powers of appointment continue to apply after a trust's vesting date, nor ignorance of the vesting date having occurred, can alter the legal and equitable rights of parties that are established by the terms of the trust on vesting. 9. Further, the Commissioner understands it is unlikely that a court would extend a vesting date once the interests of beneficiaries in the trust have vested, as this would involve defeating the fixed beneficial interests of the takers on vesting. [3] | Valid amendment to the trust's vesting date prior to vesting: 10. CGT event E1 does not happen by amending the vesting date through the valid exercise of a power in a trust deed or on approval of a relevant court. [4] | Trust law consequences of a trust vesting: 11. Though it is common to speak of a trust's vesting, it is the interests of the beneficiaries in the property of the trust that vest on the vesting date. 12. On a trust's vesting date, the interests in the property of the trust become vested in interest and possession. In the case of a discretionary trust, from the time the trust vests the trustee no longer has any discretionary power to appoint the income or capital of the trust. Rather it holds the trust property for the absolute benefit of those beneficiaries specified as the takers on vesting. [5] 13. The vesting of beneficial interests in a trust, even if described as a 'Termination Date', does not ordinarily cause the trust to come to an end [6] , nor cause a new trust to arise. Vesting does not mean trust property must be transferred to the takers on vesting on the vesting date, or that the trust must be wound up either immediately or within a reasonable period (although the deed may require these events to occur after vesting). [7] 14. Further, where a trustee continues to hold property for takers on vesting, the property is held on the same trust as existed pre-vesting; albeit the nature of the trust relationship changes. | CGT consequences of trust vesting: 15. Determining whether or not a CGT event happens on vesting requires a close consideration of the deed. This will include consideration of the effect of vesting on the beneficial interests in the trust, and the nature of the property held on trust. [8] 16. It may be the case that no CGT event happens by reason alone of the trust's vesting. But events occurring post-vesting may cause a CGT event to happen subsequently. CGT event E1 - creation of a new trust [9] 17. The vesting of a trust, of itself, does not ordinarily cause the trust to come to an end and its property to settle on the terms of a new trust. [10] As such CGT event E1 need not happen merely because a trust has vested. 18. Circumstances might, however, occur in which the parties to a trust relationship subsequently act in a manner that results in a new trust being created by declaration or settlement so as to cause CGT event E1 to happen. See Example 4 of this Ruling. 19. If CGT event E1 happens and a trust is created over the assets, the trustee of the new trust is taken to acquire each asset when the trust is created and the first element of each asset's cost base is its market value. [11] CGT event E5 - beneficiary becoming absolutely entitled [12] 20. The vesting of a trust may result in the takers on vesting becoming absolutely entitled as against the trustee to CGT assets of the trust, depending on the particular interests of the takers on vesting. CGT event E7 - disposal to beneficiary to end capital interest [13] 21. Post-vesting, CGT event E7 may happen (for example, upon actual distribution of CGT assets to beneficiaries), but it will not happen to the extent the beneficiaries are already absolutely entitled to the CGT assets as against the trustee. [14] | Taxation of trust net income after the vesting date: 22. In the year in which vesting occurs, different beneficiaries may be presently entitled to income of the trust estate derived before, as opposed to after, the vesting date. For example, in the case of a discretionary trust, a trustee may, pre-vesting, exercise their discretion to appoint income of the trust estate derived before the vesting date (pre-vesting income) among those entitled to benefit under the trust. By contrast, present entitlement to the income of the trust estate derived post-vesting on the vested property (post-vesting income) will be held by the takers on vesting (usually in proportion to their vested interests in the property of the trust). This needs to be taken into account in identifying each beneficiary's share of the trust estate's income for that year which, in turn, determines their share of the net income of the trust for the year. [15] Note: The Commissioner will accept an allocation of income of the trust estate into pre-vesting and post-vesting income of the trust estate in the year in which vesting occurs that is done on a fair and reasonable basis having regard to all of the relevant circumstances. See Example 5 of this Ruling. 23. In the following income years, the takers on vesting will usually have a fixed entitlement to the income of the trust estate and be assessable on their corresponding share of the net income. Because all of the income of the trust will flow to a beneficiary post-vesting according to their entitlement, none of the net income will fall to be assessed to the trustee. [16] 24. A payment or other purported distribution of income or capital by a trustee post-vesting that is not consistent with the vested beneficiaries' fixed interests is in breach of trust and void or otherwise not effective. [17] 25. Section 101 and subsection 95A(1) of the ITAA 1936 have no application to deem a beneficiary to be presently entitled where the trustee purports to make an appointment or payment that is inconsistent with the fixed interests of the takers on vesting. | Examples: Example 1 - ineffective amendment of vesting date 26. The deed of the Smith Discretionary Trust expressly states that the trust will vest on 30 June 2018 or on such earlier date as the trustee nominates. While the trustee has broad powers to amend the deed, those powers expressly exclude any changes that affect the definition of the vesting date. 27. Without more (for example, a court order changing the vesting date), a purported amendment by the trustee to extend the trust's vesting date will be ineffective, and the trust will vest on 30 June 2018. Example 2 - ignorance of vesting date by trustee and beneficiaries 28. A discretionary trust was established to lease property to a company that operates a medical practice. Under the deed, on the vesting date, the trustee holds the property for the takers on vesting as tenants in common in equal shares. The vesting date is defined to be 1 November 2014. 29. The trustee, unaware of the provisions of the deed regarding vesting, continued to make discretionary distributions of income and capital to beneficiaries after 1 November 2014. The beneficiaries of the trust, also unaware of the relevant provisions of the deed, did not challenge the actions of the trustee. 30. As the trust vested on 1 November 2014 by operation of the deed, the trustee had neither the power to distribute income nor capital after this date and the purported appointments were therefore ineffective. The income and capital of the trust post-vesting was instead beneficially owned in equal shares by the takers on vesting. 31. Those takers on vesting are presently entitled to the income of the trust ineffectively appointed, and assessable on their respective shares of the net income of the trust. Example 3 - extension of vesting date prior to trust vesting 32. Assume the same facts as in Example 1, except the trustee properly executed a deed extending the vesting date on 30 October 2014 (supported by a power in the deed). Assume further that the amended vesting date (1 November 2064) did not cause a breach of the rule against perpetuities. 33. The effect of the amendment is to change the vesting date of the trust to 1 November 2064. As a result, the trustee retains the power to make discretionary distributions of income and capital until that time. Example 4 - purported extension after vesting date 34. A discretionary trust holding several rental properties had a vesting date of 30 September 2016. 35. On 1 June 2017, the trustee became aware that the vesting date had passed and, with the acquiescence of the takers on vesting, continued to manage the trust as if the trust had not vested. On 29 June 2017, the trustee executed a deed of extension that purported to extend the trust's vesting date to 30 September 2057. 36. The subsequent execution of a deed of extension is void and ineffective to change a vesting date that has already passed. Any power of the trustee to extend the vesting date ceased on 30 September 2016. Note: If, once it is realised that the deed of extension is ineffective to change the trust's vesting date, all of the takers on vesting agree that the trust assets should continue to be held on a new trust on the same terms as the original trust, and this was effective to create a new trust over the assets by declaration or settlement, CGT event E1 would happen in relation to trust assets. Example 5 - present entitlement for income year in which trust vests 37. The Atkins Family Trust has a vesting date of 1 January 2017. The relevant clauses of the trust allow the trustee to determine income of the trust estate for the period before the vesting date, and distribute that income to one or more discretionary beneficiaries. On 31 December 2016, the trustee resolved to distribute all of the income up to the vesting date to Andrew. 38. The trust deed further provided that, on the vesting date, the trustee was to hold the trust property in equal shares for Andrew and Edward. 39. For the 2016-17 income year, each of Andrew and Edward is assessable on the share of the net income that relates to their share of the total income of the trust estate for the year. 40. The nature of the Atkins Family Trust's income ($100) is such that it is derived evenly across the 2016-17 income year. As such, it would be fair and reasonable to conclude that Andrew is presently entitled to $75 of the income of the trust estate for the year, being all of the income derived before the vesting date ($50) and half of the income derived after vesting date ($25) and Edward is presently entitled to $25 of the remaining income for the year, being half of the income derived after vesting date ($25). Example 6 - discretion as to takers on vesting not exercised 41. The trust deed for the Turner Family Trust provided that the trust would vest on 1 January 2015. It also provided that, unless the trustee resolved to distribute the trust capital to particular beneficiaries before the vesting date, the trustee would hold the trust property absolutely for one or more persons chosen at the discretion of the trustee from a class of listed beneficiaries prior to the trust vesting. In the absence of the exercise of that discretion, the trustee would hold the trust property absolutely and solely for Jim. 42. On 1 January 2015 (the vesting date), the trustee had not exercised their discretion to nominate any taker on vesting from the class of listed beneficiaries. Accordingly, the trustee would hold the trust property absolutely and solely for Jim.

Examples: Example 1: ineffective amendment of vesting date 26. The deed of the Smith Discretionary Trust expressly states that the trust will vest on 30 June 2018 or on such earlier date as the trustee nominates. While the trustee has broad powers to amend the deed, those powers expressly exclude any changes that affect the definition of the vesting date. 27. Without more (for example, a court order changing the vesting date), a purported amendment by the trustee to extend the trust's vesting date will be ineffective, and the trust will vest on 30 June 2018. | Example 2: ignorance of vesting date by trustee and beneficiaries 28. A discretionary trust was established to lease property to a company that operates a medical practice. Under the deed, on the vesting date, the trustee holds the property for the takers on vesting as tenants in common in equal shares. The vesting date is defined to be 1 November 2014. 29. The trustee, unaware of the provisions of the deed regarding vesting, continued to make discretionary distributions of income and capital to beneficiaries after 1 November 2014. The beneficiaries of the trust, also unaware of the relevant provisions of the deed, did not challenge the actions of the trustee. 30. As the trust vested on 1 November 2014 by operation of the deed, the trustee had neither the power to distribute income nor capital after this date and the purported appointments were therefore ineffective. The income and capital of the trust post-vesting was instead beneficially owned in equal shares by the takers on vesting. 31. Those takers on vesting are presently entitled to the income of the trust ineffectively appointed, and assessable on their respective shares of the net income of the trust. | Example 3: extension of vesting date prior to trust vesting 32. Assume the same facts as in Example 1, except the trustee properly executed a deed extending the vesting date on 30 October 2014 (supported by a power in the deed). Assume further that the amended vesting date (1 November 2064) did not cause a breach of the rule against perpetuities. 33. The effect of the amendment is to change the vesting date of the trust to 1 November 2064. As a result, the trustee retains the power to make discretionary distributions of income and capital until that time. | Example 4: purported extension after vesting date 34. A discretionary trust holding several rental properties had a vesting date of 30 September 2016. 35. On 1 June 2017, the trustee became aware that the vesting date had passed and, with the acquiescence of the takers on vesting, continued to manage the trust as if the trust had not vested. On 29 June 2017, the trustee executed a deed of extension that purported to extend the trust's vesting date to 30 September 2057. 36. The subsequent execution of a deed of extension is void and ineffective to change a vesting date that has already passed. Any power of the trustee to extend the vesting date ceased on 30 September 2016. Note: If, once it is realised that the deed of extension is ineffective to change the trust's vesting date, all of the takers on vesting agree that the trust assets should continue to be held on a new trust on the same terms as the original trust, and this was effective to create a new trust over the assets by declaration or settlement, CGT event E1 would happen in relation to trust assets. | Example 5: present entitlement for income year in which trust vests 37. The Atkins Family Trust has a vesting date of 1 January 2017. The relevant clauses of the trust allow the trustee to determine income of the trust estate for the period before the vesting date, and distribute that income to one or more discretionary beneficiaries. On 31 December 2016, the trustee resolved to distribute all of the income up to the vesting date to Andrew. 38. The trust deed further provided that, on the vesting date, the trustee was to hold the trust property in equal shares for Andrew and Edward. 39. For the 2016-17 income year, each of Andrew and Edward is assessable on the share of the net income that relates to their share of the total income of the trust estate for the year. 40. The nature of the Atkins Family Trust's income ($100) is such that it is derived evenly across the 2016-17 income year. As such, it would be fair and reasonable to conclude that Andrew is presently entitled to $75 of the income of the trust estate for the year, being all of the income derived before the vesting date ($50) and half of the income derived after vesting date ($25) and Edward is presently entitled to $25 of the remaining income for the year, being half of the income derived after vesting date ($25). | Example 6: discretion as to takers on vesting not exercised 41. The trust deed for the Turner Family Trust provided that the trust would vest on 1 January 2015. It also provided that, unless the trustee resolved to distribute the trust capital to particular beneficiaries before the vesting date, the trustee would hold the trust property absolutely for one or more persons chosen at the discretion of the trustee from a class of listed beneficiaries prior to the trust vesting. In the absence of the exercise of that discretion, the trustee would hold the trust property absolutely and solely for Jim. 42. On 1 January 2015 (the vesting date), the trustee had not exercised their discretion to nominate any taker on vesting from the class of listed beneficiaries. Accordingly, the trustee would hold the trust property absolutely and solely for Jim. 43. This Ruling applies both before and after its date of issue. However, the Ruling will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling (see paragraphs 75 to 76 of Taxation Ruling TR 2006/10 Public Rulings ). 44. The following is a detailed contents list for this Ruling: Commissioner of Taxation 15 August 2018 This opinion is published by the ATO to provide transparency about the legal advice it has received as part of the process of assisting the Commissioner to formulate the views expressed in that draft Ruling. The opinion is general in nature, does not provide advice or an ATO view on the application of any aspect of the law and cannot be relied upon for any purpose. Taxpayers may approach the ATO if they would like an ATO view on how the law applies to their particular circumstances. MEMORANDUM OF ADVICE 1. The Commissioner has recently observed a number of cases in which a taxpayer asserts that a trust continues to function on the same terms, despite the stated vesting date having passed and other requirements of the relevant vesting clauses in the trust deed not having been complied with. It has also been argued that a trustee may exercise a power to vary the vesting date of the trust, after that date has passed. 2. We are instructed to advise on the likely merits of such arguments, and as to the general legal and equitable effects of a stated vesting date passing, including in circumstances where the vesting date passes without the knowledge or realisation of the trustee or beneficiary or beneficiaries. 3. Our instructions proceed by providing a sample fact pattern, which concerns a particular deed and then asking a series of questions that arise from that fact pattern. 4. The advice will therefore first outline the facts relevant to the particular Trust, and after considering the general principles that seem to us to apply, will turn to consider the specific questions on which our opinion is sought. The Trust Deed Terms of the trust 5. The Trust is a private discretionary trust settled by deed on 1 January 1980. 6. Clause 2 is a declaration of trust by the settlor. Clause 3 (read with clause 4) established the trust as a "discretionary trust" [A1] and provided in relevant part as follows: 7. However, the trust just described had a finite life. By clause 4 of the trust deed, "as from the Vesting Day", the trust estate was to be held on trust "for" such of the General Beneficiaries (and in such proportions) as the trustee may appoint in writing prior to the Vesting Day and, absent such a determination, in trust for certain other identified beneficiaries in the proportions set out in the clause. 8. Clause 4 is an important clause, and provides as follows (emphasis added): 9. As will appear, in our opinion the effect of clause 4 is that, upon the happening of the Vesting Day, the trust ceased being a discretionary trust and became a fixed trust. That occurred automatically and by operation of clause 4 itself. Henceforth the interests of the former discretionary objects (the "General Beneficiaries") no longer comprised an equitable right to compel due administration of the trust, and became instead an interest in the trust estate vested in possession, and that could properly be described as absolute and unconditional. The trustee's duty altered to a correlative extent, changing from a duty to properly consider whether to distribute the net income of the trust in accordance with the discretionary power of appointment (clause 3), to a duty to hold the whole of the capital and income for the benefit of the relevant beneficiaries. 10. When did the Vesting Day occur? Clause 1(c) defines Vesting Day in the following terms: 11. The day specified in the Schedule as the Vesting Day is the "21st anniversary of the date of the Trust Deed". That date was 1 January 2001. 12. In addition to the specific power to amend the Vesting Day (clause 1(c)(iii)), the trust deed gives the trustee a power to amend any provision of the deed (clause 16). That clause is said to be exhaustive of the trustee's power of amendment (clause 25). 13. Clause 16 provides as follows (emphasis added): [A2] 14. The whole of the deed is to be construed so that the various clauses are consistent the one with the other. In our opinion, when clause 1(c)(iii), 16(c) and 25 are read together, it is apparent that clause 1(c)(iii) is intended to comprehend a case where the trustee alters the Vesting Day before the Vesting Day would otherwise arrive, for it would otherwise conflict with the clear words of clause 16(c). 15. Finally, it may be noted that in addition to certain named persons, and their children, the class of discretionary objects includes trusts or companies in which those persons are interested and that are nominated by the trustee from time to time (clause 1(d)(2)(v)). Performance of the Trust - ignorance of vesting on 1 January 2001 16. We are instructed that neither the trustee nor the beneficiaries were aware that on 1 January 2001 the rights of the parties changed in the manner set out in clause 4, or that 1 January 2001 was the day described as the Vesting Day in the trust deed. 17. The trustee has not acted on the basis that on and from 1 January 2001 it was the trustee of a fixed trust on the terms set out in clause 4. The trust income has not been distributed in a manner consistent with the ownership rights fixed by clause 4. 18. Instead, from 1 January 2001 until the present time, the trustee has continued to administer the trust as if the Vesting Day had not passed, including by purporting to exercise its discretionary powers to distribute the net income of the trust estate. The trustee has purported to distribute the net income as it sees fit, and in a manner not consistent with the trusts created by clause 4. Deed of Variation executed 31 March 2014 purporting to extend the Vesting Day 19. On 31 March 2014 the trustee executed a deed in which the trustee describes the terms on which the trustee has at all times continued to manage the income and capital of the trust (clause 4 of the Deed of Variation), and by which the trustee purports to extend the trust's Vesting Day to 2030 (clauses 5 and 6 of the Deed of Variation). 20. In that Deed of Variation it is stated that the trustee had recently become aware of the passing of the Vesting Day (see Recital B). Taxpayer's submission 21. We are instructed that the trustee and beneficiaries assert that the same trust continues on its original terms (except insofar as the definition of the Vesting Day is concerned) because the very fact that the trustee and beneficiaries have acted as if the trust were continuing is evidence that there was an implied exercise of the power to extend the Vesting Day. For the reasons set out below, we consider that argument to be wrong. 22. It is also asserted that no CGT event occurred on the Vesting Day, because the trust did not vest. Whilst we consider that the trust did vest on the Vesting Day, we are not asked to advise whether the taxpayer is correct that no CGT event occurred, and do not do so. What happened when the Vesting Day arrived on 1 January 2001? 23. We will first consider the position that obtained before 1 January 2001, and then the position that obtained after that day. Position up to 1 January 2001 24. Until such time as the applicable Accounting Period comes to an end, or the trustee decides to appoint the net income of the trust, [A3] no discretionary object can be certain that they will receive some or any of the available net income earned during an Accounting Period, either by appointment (viz. clause 3(b)(i), 3(c)) or by accumulation (clause 3(b)(ii), 3(e),(f)). That is because for so long as an appointment has not been made in favour of a particular trust object, it remains possible that the whole of the net income will be appointed to some other member or members of the class of objects, up until the Accounting Period comes to an end. 25. Further, the class of objects in respect of which an appointment may be made is capable of expanding from time to time, and will do so upon the birth of children of certain named beneficiaries, or upon the trustee making a nomination of the kind contemplated by clause 1(d)(2)(v) of the deed. 26. The class of objects is also capable of narrowing over time, and will do so upon the death of General Beneficiaries who are natural persons, or by a beneficiary nominated pursuant to clause 1(d)(2)(v) ceasing to exist, or its ownership changing in a way that brings the entity outside the scope of that clause. 27. In these circumstances, in our opinion, until 1 January 2001, the Trust had the following features: [A4] 28. In the foregoing discussion, the term "vested interest" refers to an interest in property that is not subject to any condition precedent, and is to be distinguished from a merely contingent interest, which will not vest unless and until some uncertain requirement (other than merely the determination of a prior interest) is satisfied. [A8] 29. In the context of estates in land, and sometimes also intangible property (which is incapable of being possessed), interests that are vested are often divided into those said to be "vested in possession" and interests that are merely "vested in interest". The former is an interest conferring an immediate right to present enjoyment of property (viz. by possession or other means of enjoyment [A9] , whilst the latter confers a present right to future enjoyment of property (viz. a present right to possession or other means of enjoying the property at a future time). [A10] So, in a trust of land for A for his life and upon A's death for B, the life tenant A has an interest vested in possession, whereas the remainder-man B has an interest vested in interest only, and that will become an interest vested in possession upon A's death. [A11] 30. The conclusion that the discretionary objects of the Trust had no fixed proprietary interest in the income or capital of the trust, whether vested in interest or in possession (subject to the proviso at note 5 above), matches the position that often (but not always [A12] obtains for the object of a discretionary trust. Indeed, the interest of members of a class of objects under an ordinary discretionary trust has been described as a "discretionary interest". [A13] Position on and from the Vesting Day of 1 January 2001 31. When a discretionary trust is expressed to continue for a defined period of time, as is often the case in order to protect against the rule against perpetuities, the consequences of the relevant date passing will in each case depend upon the terms of the particular trust. 32. For this Trust, the consequences of the Vesting Day passing are set out in clause 4, the terms of which were set out above. 33. Assuming that no instrument of appointment was executed by the trustee in the manner contemplated by the third, fourth and fifth lines of clause 4, and that the only Specified Beneficiaries are those whose names appear in the Schedule at page 24 of the trust deed, and that those persons survived to 1 January 2001, then in our opinion, on and from 1 January 2001, the capital and income of the trust estate is to be held on trust for two named beneficiaries "as tenants in common in equal shares". So much is apparent from the terms of clause 4(a) of the Trust deed, lines 4 and 5 of which ("...in trust for ...") require the trustee to hold the available trust estate existing as at 1 January 2001, for the benefit of the two identified trust beneficiaries, as tenants in common in equal shares. 34. For these reasons, in our opinion, from 1 January 2001 onwards, the trustee ceased to hold the trust estate pursuant to a discretionary trust, and held it on the terms of a fixed trust. The incidents of the new fixed trust are considered next. 35. From the Vesting Day onward, the trust beneficiaries obtained a vested interest in the trust estate. That interest was vested in interest and possession as to capital, and as to income earned and available for distribution from time to time (and with some rights as well in respect of the gross income earned). The distributable income may well be different in amount to the taxable income of the trust. [A14] The position was otherwise prior to vesting, for the trustee was entitled to distribute only part or all of the taxable income of the trust (see the definition of "nett income" in clause 1(k)). 36. It may be noted, also, that after the Vesting Day the beneficiaries' right to income earned from time to time is an incident of his or her ownership of the trust capital (equitable title to the assets extending to ownership of its fruits), and does not derive from the exercise of a power of appointment on the part of the trustee, as was the case prior to the vesting. 37. Looking next at the powers and discretions of the trustee after the Vesting Day, from 1 January 2001, the trustee ceased to have both the power of appointment conferred by clause 3, and the special power or right conferred by the fourth and fifth lines of clause 4. The trustee may, instead, properly deal with the trust capital and income only in a manner consistent with the ownership interests of the two beneficiaries. [A15] 38. Equally, in our opinion, on and from 1 January 2001 the trustee will become subject to the ordinary duties of a trustee of a private fixed trust, to safeguard the trust estate, and to deal with it only on the terms of the trust. Consequence of mistaken distributions of trust income after the Vesting Day 39. The distinctive feature of the fact pattern now being considered is that the trustee continues to believe that the discretionary trust continues, when in fact that trust has ceased to apply, and has been replaced by a new fixed trust on quite different terms. 40. What are the rights and obligations of the trustee and beneficiary in such a case? The simplest case involves the actual payment of money by the trustee, to one beneficiary, in an amount that exceeds what that beneficiary was in fact entitled to under the terms of the fixed trust: for example, if the trustee were to pay all of the net income to one beneficiary in the mistaken belief that it still enjoyed a discretionary power of appointment. In fact, all other things being equal, the trustee should have either paid half of the distributable income to each beneficiary or accumulated the income in its own hands (recording it as an accumulation owned equally by both cestui que trust). 41. If the trustee were to overpay one beneficiary in this way, then in our opinion: [A16] 42. The matrix of obligations just described is adapted to undoing the unauthorised overpayment. The payment itself took effect not because of a power of disposition given by the instrument of trust (which indeed gave no right to make the payment), but was instead effective because the trustee's ownership of legal title to the trust fund carries with it a power to pay trust income away. If what the trustee had done to appoint the income falls short of actual payment (or other disposition effective at common law), and would instead be capable of taking effect only in equity, in our opinion that conduct is of no effect at all, if not authorised by the trust. The position is quite unlike the exercise of an actual power of appointment in a manner having unintended fiscal or other consequences. [A19] In the fact-pattern being considered, the trustee lacks any power at all to make the disposition, for the power of appointment formerly reposed in him has, since the vesting date, been taken away. Insofar as the language of "void" and "voidable" is to be employed, in our opinion it is plain that the purported disposition is properly described as void and not voidable. [A20] 43. The underpaid beneficiary could not ratify the trustee's breach of trust in the sense of giving authority to appoint income where none otherwise existed. However, in our opinion he or she could validly agree to the overpaid beneficiary retaining the overpaid monies and to release the trustee from any claim arising from the mistake. 44. Where: the correct legal characterisation of the action of the underpaid beneficiary is, in our opinion, a gift of the overpaid sum made by the underpaid beneficiary to the overpaid beneficiary. 45. We consider that this is likely to be correct characterisation of the fact pattern for the following reasons. In the posited scenario, when the mistaken trustee made the overpayment, legal title to the overpaid monies passed to the overpaid beneficiary. [A22] However, prior to the agreement and release referred to in 44(c) above, the underpaid beneficiary held an equitable interest in the overpaid monies that arose on and from the time the overpayment was made. For his part, on and from the moment the overpaid monies were received, the overpaid beneficiary held those funds on trust for the underpaid beneficiary, and enjoyed no equitable proprietary interest in them. On the assumption that the overpaid monies remained traceably identified in the hands of the overpaid beneficiary at the date of the agreement and release, following the agreement and release referred to 44(c) above, the overpaid beneficiary had a complete title to the overpaid monies, and the underpaid beneficiary retained none. No consideration has been provided by the overpaid beneficiary. In the result, the proper characterisation of the effect of the agreement and release on the facts posited is, in our opinion, that of a gift by the underpaid beneficiary, of his or her equitable interest in the overpaid sum, to the overpaid beneficiary. We do not consider that the arrangement can be characterised as one where the settlor (or the trustee) has made the gift, or where the gift has come merely from the trust estate itself, [A23] for that characterisation does not sufficiently reflect the circumstance that, before the arrangement being discussed, beneficial ownership of the overpaid sum rested with underpaid beneficiary. 46. What of the circumstance where, at the time of the agreement and release, there remains no traceably identifiable product of the overpaid monies in the hands of the overpaid beneficiary; for example, because the funds were paid into an overdrawn bank account, or were all spent in a way that left no corpus over which equitable title might be asserted? In that scenario, the effect of the agreement and release [A24] will be to extinguish the personal obligation in the overpaid beneficiary to repay the overpaid sum to the trustee, the trustee's right to recover the overpayment, and the other rights and obligations arising by operation of law to undo the consequence of the unauthorised payment, and which are summarised in paragraph [41] above. The language of "gift" fits less comfortably in this scenario, for the reason that, unlike the fact-pattern just discussed (where the money or its product remains identifiable in the hands of the overpaid beneficiary), the overpaid beneficiary has not acquired a new proprietary interest that is equal to the interest given up by the underpaid beneficiary. 47. It is, however, apparent that the overpaid beneficiary has obtained new rights of value, and the underpaid beneficiary has lost accrued rights of value. The overpaid beneficiary is no longer indebted to the trustee in the amount of the overpayment. The underpaid beneficiary no longer has enforceable claims in respect of the overpayment (viz. to require the trustee to reinstate the trust fund in the amount of the overpayment by recourse to his own assets, or requiring him to recover the overpayment from the overpaid beneficiary, or, insofar as such a claim may be available, against the overpaid beneficiary directly, by way of a re Diplock claim). Looked at in terms of the effect of the rearrangement of rights following the contemplated agreement and release, the overpaid beneficiary has received a gift of the overpaid sums, and has done so by reason of the agreement and release. Whether the putative donor is to be regarded as the underpaid beneficiary, or the settlor or trustee himself, might conceivably turn upon the particular circumstances of the case, but it would seem to us likely that in most cases, the donor will be the underpaid beneficiary, for the net effect of the arrangement is that his entitlement to and in the trust estate (howsoever enforceable) is reduced, and that of the overpaid beneficiary is pro tanto increased. Did the conduct of the trustee and beneficiaries from 2 January 2001 to 30 March 2014 extend the Vesting Day (because the fact that the trustee and beneficiaries have acted as if the trust were continuing is evidence that there was an implied exercise of the power to extend the Vesting Day)? 48. In our respectful opinion the argument just noted is plainly wrong. The fact that after 1 January 2001 the trustee and beneficiaries continued to conduct their affairs on the footing that the discretionary trust continued in force (being ignorant of the change effected by clause 4) does not have the consequence that the Vesting Date is extended. Clause 4 was self-executing and was triggered by the effluxion of time. The consequences effected by the clause occurred automatically on 1 January 2001, and irrespective of the knowledge or intention of the trustee and beneficiaries (each of whom had anyway effectively pre-agreed to the regime imposed by clause 4 by consenting to be bound by the trust deed). 49. In any event, as will appear, in our opinion, after 1 January 2001 there was no power to extend the Vesting Date conferred by the trust deed. There was, therefore, no power of extension to be exercised by the trustee and beneficiaries, either expressly or by implication from their conduct. 50. It should be added, for completeness, that we have considered the argument expressed in the paper "Vesting of Trust Deeds" (30th National Convention of the Tax Institute, March 2015) (at 5.1.7) that is briefed and to which those instructing us have referred. We respectfully consider this argument to be wrong, and that the reasoning in Cajkusic v Cmr of Taxation [2006] FCAFC 164; (2006) 155 FCR 430 at [20] on which the paper relies, does not support the argument advanced. Did the Deed of Variation executed on 31 March 2014 alter the Vesting Day to 2030? 51. In our opinion, the instrument of variation did not alter the Vesting Day for the following reasons. 52. The power to amend the trust deed is set out in clause 16 (and see also clause 25). Clause 16 provides as follows (emphasis added): 53. In our opinion, the effect of clause 16(c) is that the trustee does not have a power or authority to revoke add to or vary any provision of the trust deed to the extent doing so would "affect" any interest which has "vested" prior to the date of the purported variation, alteration or addition. For the reasons explained earlier, in our opinion clause 1(c)(iii) should be construed consistently with clause 16(c), and so read as permitting alteration of the Vesting Day only before the trust in fact vests. 54. The effect of clause 4 was to vest new proprietary interests in the trust beneficiaries, on and from 1 January 2001, in the manner previously discussed. 55. Accordingly, in our opinion, on and from 1 January 2001, the trust deed became incapable of being altered by the trustee in a way that would "affect" the interests so vested. 56. The question arising is whether varying the Vesting Day would have that effect. 57. In our opinion, the answer is, plainly "yes". After 1 January 2001, purporting to alter the Vesting Day to some later point in time "affected" an interest which has "vested" prior to the date of the purported variation, within the meaning of clause 16(c). That is because purporting to alter the Vesting Date to some later date necessarily required the beneficiaries' interest in the trust estate, which vested on 1 January 2001, to be transformed into a contingent, discretionary interest of the kind enjoyed by a discretionary object (para [27] above). 58. For these reasons, in our opinion, on and from 1 January 2001 the trustee had no power to extend the Vesting Day, and the Deed of Variation executed by the trustee on 31 March 2014 was not effective to alter the Vesting Day to 2030 or to any other date. 59. We would add that, in our opinion, even if the trust deed did not contain a clause in the terms of 16(c), it would be a surprising construction of the instrument for it to be interpreted as giving a power to the trustee to retrospectively alter the vested beneficial interests of the cestui que trust: which seems to us to be a necessary consequence of a subsequent alteration of the vesting date. 60. On that construction of the deed, from the vesting date the beneficiaries would have particular proprietary interests, but the trustee could at a later date retrospectively alter those proprietary interests, transforming them as from the date of their creation, into merely discretionary interests (and correspondingly enlarging the trustee's own powers). In our opinion a court would be reluctant to find that that was the presumed intention of the settlor. It is not only that the retrospective alteration of rights of property is conceptually difficult, but the practical consequences include the prospect that transfers of capital or payments of income that were valid when made could become invalid and in breach of trust; tax might be levied and paid on a basis subsequently falsified; and conduct which was lawful when engaged in could become retrospectively unlawful (and vice versa). The advice will return to this point again, in considering questions 3 and 8(f). Particular questions 61. We now turn to consider the specific questions on which our opinion is sought. 62. Questions 1 to 7 will be set out first: 63. In our opinion, the answers to each of those questions are as follows. 64. In relation to question 1: 65. In relation to question 2: the execution of the Deed of Extension was not effective to change the Vesting Day, for the reasons explained earlier. 66. As to question 3: We are not presently able to see in what circumstances a trustee might conceivably be capable of changing a vesting day after the original vesting day had passed. 67. Some of the practical difficulties that would flow from an ex post facto changing of the vesting date were noted earlier (para [60] above). If clause 16(c) of the Trust had provided instead that the trustee could, after the Vesting Day, by instrument in writing fix a new and later Vesting Day, consideration would have to be given to what were the parties' true rights when the Vesting Day arrived. If this new clause 16(c) was capable of taking effect according to its terms, then from 1 January 2001, the trust beneficiaries would own the trust estate as tenants in common, but only defeasibly, subject to a power in the trustee to retrospectively extinguish that title and to replace it with a discretionary interest (and to correspondingly increase the trustee's powers and discretions). In such a case the beneficiaries' right to receive and retain income or other trust property after the vesting date would be uncertain, because that right would be conditional upon the trustee not subsequently altering the vesting date. No beneficiary would be able to safely deal with any income or other trust property received after the vesting date, for the receipt would be pregnant with the risk that it could subsequently become unauthorised and improper. Consideration might also have to be given to the effect of such a clause on the rule against perpetuities. 68. In relation to question 4: in our opinion, in general a Court has no power to extend the vesting date for a trust after its expiration. A court has no power at general law to alter or amend the terms of a trust instrument: Re Dion Investments (2014) 87 NSWLR 753 (CA) at [48]. A number of authorities had held that the power of the Court in provisions such as s81 of the Trustee Act 1925 (NSW) to confer on trustees power to effect (inter alia) a "transaction" which was, in the opinion of the Court, expedient but could not be effected by reason of a lack of power of the trustee, authorised the Court to empower the trustee to amend the trust deed by extending the vesting date: see eg., Stein v Sybmore Holdings Pty Limited (2006) 64 ATR 325 at [45]-[46], Barry v Borlas Pty Limited [2012] NSWSC 831. A like position was reached in relation to analogous provisions in other states: see Re Arthur Brady Family Trust; Re Trekmore Trading Trust [2014] QSC 244 (concerning s94 of the Trusts Act 1973 (Qld)). 69. However, in our opinion, since the decision of the Court of Appeal in Re Dion, the earlier decisions that had held that s81 of the Trustee Act 1925 (NSW) authorised a Court to empower a trustee to amend a trust deed by extending the vesting date, must be taken to have been disapproved. The effect of the Court of Appeal's decision is that the reference to "transaction" in s81 of the Trustee Act does not include an amendment of a trust deed, except to the extent it is a procedural step to effect a specific dealing (at [94]-[96]). In the circumstance currently under consideration, there is no specific dealing for which a procedural step requires amending the trust deed to effect the dealing. As presently instructed, we find it difficult to imagine a scenario in which altering the vesting date after the trust has vested according to its terms, would be a procedural step to effect a specific dealing. 70. In our opinion, the same result will likely obtain in other States in relation to provisions analogous to s81 of the Trustee Act 1925 (NSW). This is so despite some differences in the wording of those provisions, and despite first instance decisions to the contrary pre-dating Re Dion. Thus, while the Court of Appeal in Re Dion adverted to some differences between s81 of the Trustee Act (NSW) and s94 of the Trusts Act 1973 (Qld) considered in Re Arthur Brady Family Trust (at [84]), in Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 at [186]-[183] Brereton J applied the conclusion in Re Dion to s89 of the Trustees Act 1962 (WA) (set out at [181]), which is in substantially identical terms to s94 of the Trusts Act 1973 (Qld) (see at [182]). We are reinforced in our view by the statement appearing in Jacobs Law of Trusts (8th Ed, 2016) at [17-06]. The learned authors there state, with reference to Re Dion and Hancock v Rinehart, the following general proposition in relation to all of the provisions in Australian jurisdictions that follow the form of s57 of the Trustees Act 1925 (UK): 71. In relation to question 5: in our opinion, unless there exists a clause in the trust deed providing for the trust to be "wound up" following vesting, or an immediate distribution is plainly contemplated by other terms of the deed, the trustee ought not to have a duty to wind up the trust after it has vested, by distributing all of the trust fund as soon as practicable after the Vesting Day. 72. Those instructing us have drawn attention to the reasons of Justice Anderson in Clay v. James [2001] WASCA 18 at [6] and [11]. In our respectful opinion those passages should be understood in the light of the particular trust deed before the court. It is apparent that the learned judge considered that clause 2 of the trust deed had the effect that upon the expiration of the "Trust Period" the duty of the trustee was to pay the amount of the trust fund in accordance with the settlement and otherwise to take all steps necessary to wind up the trust: at [6]. In our opinion whilst that may (or may not) be the correct interpretation of clause 2 of the deed before the court, the decision is not authority that in a fact pattern of the kind currently being considered, there is usually an implied obligation on the trustee to distribute the trust fund or to otherwise wind up the trust once it has vested. 73. So, for example, in relation to the Trust under consideration, the trust deed provides in clause 4 that upon the Vesting Day, if there are two surviving Specified Beneficiaries, then the trustee is henceforth to hold the trust estate for each of them as tenants in common in equal shares. In our opinion there is nothing in clause 4 that implies that the trustee must thereafter distribute the trust fund and so bring the trust to an end. Rather, in our opinion, the working assumption of clause 4 is that the trustee is obliged to continue to hold the fund on the trusts there set out. An implied obligation to distribute the fund to the beneficiaries would be a significant limitation upon the trust, and an important obligation upon the trustee. In our opinion, if this was the intention of the settlor, it could be expected to be made clear. 74. The instrument is also to be read as a whole, and if the other terms of the trust indicated that the trustee was required to distribute the fund upon vesting, it might be that a term to that effect could properly be implied. However, in our opinion, the terms of the Trust deed tell against that construction. By clause 6, whilst some of the trustee's discretionary powers are expressed to not survive vesting (for example, the power to lend trust money to the beneficiaries (clause 6(a)), and the power given by clause 7(x)), other powers contain no such temporal limitation, and this includes the trustee's power of investment (clause 7(a)). The juxtaposition of these two types of clause, the one limited to the period prior to vesting, and the other apparently intended to survive vesting, tends to suggest that the presumed intention of the settlor was that the trust would continue after the Vesting Day. 75. In relation to question 6(a): assuming that the incorrect appointment of income has been made by mistake, and has been accompanied by a payment of money, then: 76. A further discussion of the rights of the parties inter se is set out at paragraph [41] above. 77. In relation to question 6(b): the principles of general application are, in our opinion, those principles that are to be applied to any unauthorised and mistaken distribution by a trustee to a beneficiary. 78. The level of trustee knowledge or competence is, in our opinion, irrelevant to whether the trust has vested. If the trustee is in fact aware of or negligent as to the misapplication of trust money, that might be relevant to the extent of the beneficiaries' claims against the trustee, and to the availability of a defence of the kind established by section 76 of the Trusts Act 1973 (Qld) (whereby a trustee who establishes that he has acted honestly and reasonably and ought fairly to be excused may be relieved from liability). 79. As to question 6(c), and at the risk of restating matters familiar to those instructing us: 80. As to question 6(d): 81. Question 7 concerns the capital gains tax consequences in respect of CGT event E1 in section 104-55 of the ITAA 1936. For the reasons explained earlier, our preliminary view is that the transformation of the trust from a discretionary to a fixed trust, by operation of the trust deed itself, does not involve the creation of a trust over a CGT asset by declaration or settlement, if the key inquiry is whether there has been continuity of the trust of the kind discussed in FCT v Clark (2011) 190 FCR 206 (Full Ct) or whether the original trust has instead terminated. We would wish to consider this issue further before coming to a final view, and would be pleased to do so in a subsequent advice if required. 82. We are also asked the following further questions: 83. Our opinion in relation to these further questions is as follows: 84. We advise accordingly. Dominic O'Sullivan QC Michael O'Meara 31 October 2016 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously released in draft form as TR 2017/D10

Appendix: 44. The following is a detailed contents list for this Ruling: Commissioner of Taxation 15 August 2018 This opinion is published by the ATO to provide transparency about the legal advice it has received as part of the process of assisting the Commissioner to formulate the views expressed in that draft Ruling. The opinion is general in nature, does not provide advice or an ATO view on the application of any aspect of the law and cannot be relied upon for any purpose. Taxpayers may approach the ATO if they would like an ATO view on how the law applies to their particular circumstances. | MEMORANDUM OF ADVICE: 1. The Commissioner has recently observed a number of cases in which a taxpayer asserts that a trust continues to function on the same terms, despite the stated vesting date having passed and other requirements of the relevant vesting clauses in the trust deed not having been complied with. It has also been argued that a trustee may exercise a power to vary the vesting date of the trust, after that date has passed. 2. We are instructed to advise on the likely merits of such arguments, and as to the general legal and equitable effects of a stated vesting date passing, including in circumstances where the vesting date passes without the knowledge or realisation of the trustee or beneficiary or beneficiaries. 3. Our instructions proceed by providing a sample fact pattern, which concerns a particular deed and then asking a series of questions that arise from that fact pattern. 4. The advice will therefore first outline the facts relevant to the particular Trust, and after considering the general principles that seem to us to apply, will turn to consider the specific questions on which our opinion is sought. | Terms of the trust: 5. The Trust is a private discretionary trust settled by deed on 1 January 1980. 6. Clause 2 is a declaration of trust by the settlor. Clause 3 (read with clause 4) established the trust as a "discretionary trust" [A1] and provided in relevant part as follows: 7. However, the trust just described had a finite life. By clause 4 of the trust deed, "as from the Vesting Day", the trust estate was to be held on trust "for" such of the General Beneficiaries (and in such proportions) as the trustee may appoint in writing prior to the Vesting Day and, absent such a determination, in trust for certain other identified beneficiaries in the proportions set out in the clause. 8. Clause 4 is an important clause, and provides as follows (emphasis added): 9. As will appear, in our opinion the effect of clause 4 is that, upon the happening of the Vesting Day, the trust ceased being a discretionary trust and became a fixed trust. That occurred automatically and by operation of clause 4 itself. Henceforth the interests of the former discretionary objects (the "General Beneficiaries") no longer comprised an equitable right to compel due administration of the trust, and became instead an interest in the trust estate vested in possession, and that could properly be described as absolute and unconditional. The trustee's duty altered to a correlative extent, changing from a duty to properly consider whether to distribute the net income of the trust in accordance with the discretionary power of appointment (clause 3), to a duty to hold the whole of the capital and income for the benefit of the relevant beneficiaries. 10. When did the Vesting Day occur? Clause 1(c) defines Vesting Day in the following terms: 11. The day specified in the Schedule as the Vesting Day is the "21st anniversary of the date of the Trust Deed". That date was 1 January 2001. 12. In addition to the specific power to amend the Vesting Day (clause 1(c)(iii)), the trust deed gives the trustee a power to amend any provision of the deed (clause 16). That clause is said to be exhaustive of the trustee's power of amendment (clause 25). 13. Clause 16 provides as follows (emphasis added): [A2] 14. The whole of the deed is to be construed so that the various clauses are consistent the one with the other. In our opinion, when clause 1(c)(iii), 16(c) and 25 are read together, it is apparent that clause 1(c)(iii) is intended to comprehend a case where the trustee alters the Vesting Day before the Vesting Day would otherwise arrive, for it would otherwise conflict with the clear words of clause 16(c). 15. Finally, it may be noted that in addition to certain named persons, and their children, the class of discretionary objects includes trusts or companies in which those persons are interested and that are nominated by the trustee from time to time (clause 1(d)(2)(v)). | Performance of the Trust - ignorance of vesting on 1 January 2001: 16. We are instructed that neither the trustee nor the beneficiaries were aware that on 1 January 2001 the rights of the parties changed in the manner set out in clause 4, or that 1 January 2001 was the day described as the Vesting Day in the trust deed. 17. The trustee has not acted on the basis that on and from 1 January 2001 it was the trustee of a fixed trust on the terms set out in clause 4. The trust income has not been distributed in a manner consistent with the ownership rights fixed by clause 4. 18. Instead, from 1 January 2001 until the present time, the trustee has continued to administer the trust as if the Vesting Day had not passed, including by purporting to exercise its discretionary powers to distribute the net income of the trust estate. The trustee has purported to distribute the net income as it sees fit, and in a manner not consistent with the trusts created by clause 4. | Deed of Variation executed 31 March 2014 purporting to extend the Vesting Day: 19. On 31 March 2014 the trustee executed a deed in which the trustee describes the terms on which the trustee has at all times continued to manage the income and capital of the trust (clause 4 of the Deed of Variation), and by which the trustee purports to extend the trust's Vesting Day to 2030 (clauses 5 and 6 of the Deed of Variation). 20. In that Deed of Variation it is stated that the trustee had recently become aware of the passing of the Vesting Day (see Recital B). | Taxpayer's submission: 21. We are instructed that the trustee and beneficiaries assert that the same trust continues on its original terms (except insofar as the definition of the Vesting Day is concerned) because the very fact that the trustee and beneficiaries have acted as if the trust were continuing is evidence that there was an implied exercise of the power to extend the Vesting Day. For the reasons set out below, we consider that argument to be wrong. 22. It is also asserted that no CGT event occurred on the Vesting Day, because the trust did not vest. Whilst we consider that the trust did vest on the Vesting Day, we are not asked to advise whether the taxpayer is correct that no CGT event occurred, and do not do so. | What happened when the Vesting Day arrived on 1 January 2001?: 23. We will first consider the position that obtained before 1 January 2001, and then the position that obtained after that day. | Position up to 1 January 2001: 24. Until such time as the applicable Accounting Period comes to an end, or the trustee decides to appoint the net income of the trust, [A3] no discretionary object can be certain that they will receive some or any of the available net income earned during an Accounting Period, either by appointment (viz. clause 3(b)(i), 3(c)) or by accumulation (clause 3(b)(ii), 3(e),(f)). That is because for so long as an appointment has not been made in favour of a particular trust object, it remains possible that the whole of the net income will be appointed to some other member or members of the class of objects, up until the Accounting Period comes to an end. 25. Further, the class of objects in respect of which an appointment may be made is capable of expanding from time to time, and will do so upon the birth of children of certain named beneficiaries, or upon the trustee making a nomination of the kind contemplated by clause 1(d)(2)(v) of the deed. 26. The class of objects is also capable of narrowing over time, and will do so upon the death of General Beneficiaries who are natural persons, or by a beneficiary nominated pursuant to clause 1(d)(2)(v) ceasing to exist, or its ownership changing in a way that brings the entity outside the scope of that clause. 27. In these circumstances, in our opinion, until 1 January 2001, the Trust had the following features: [A4] 28. In the foregoing discussion, the term "vested interest" refers to an interest in property that is not subject to any condition precedent, and is to be distinguished from a merely contingent interest, which will not vest unless and until some uncertain requirement (other than merely the determination of a prior interest) is satisfied. [A8] 29. In the context of estates in land, and sometimes also intangible property (which is incapable of being possessed), interests that are vested are often divided into those said to be "vested in possession" and interests that are merely "vested in interest". The former is an interest conferring an immediate right to present enjoyment of property (viz. by possession or other means of enjoyment [A9] , whilst the latter confers a present right to future enjoyment of property (viz. a present right to possession or other means of enjoying the property at a future time). [A10] So, in a trust of land for A for his life and upon A's death for B, the life tenant A has an interest vested in possession, whereas the remainder-man B has an interest vested in interest only, and that will become an interest vested in possession upon A's death. [A11] 30. The conclusion that the discretionary objects of the Trust had no fixed proprietary interest in the income or capital of the trust, whether vested in interest or in possession (subject to the proviso at note 5 above), matches the position that often (but not always [A12] obtains for the object of a discretionary trust. Indeed, the interest of members of a class of objects under an ordinary discretionary trust has been described as a "discretionary interest". [A13] | Position on and from the Vesting Day of 1 January 2001: 31. When a discretionary trust is expressed to continue for a defined period of time, as is often the case in order to protect against the rule against perpetuities, the consequences of the relevant date passing will in each case depend upon the terms of the particular trust. 32. For this Trust, the consequences of the Vesting Day passing are set out in clause 4, the terms of which were set out above. 33. Assuming that no instrument of appointment was executed by the trustee in the manner contemplated by the third, fourth and fifth lines of clause 4, and that the only Specified Beneficiaries are those whose names appear in the Schedule at page 24 of the trust deed, and that those persons survived to 1 January 2001, then in our opinion, on and from 1 January 2001, the capital and income of the trust estate is to be held on trust for two named beneficiaries "as tenants in common in equal shares". So much is apparent from the terms of clause 4(a) of the Trust deed, lines 4 and 5 of which ("...in trust for ...") require the trustee to hold the available trust estate existing as at 1 January 2001, for the benefit of the two identified trust beneficiaries, as tenants in common in equal shares. 34. For these reasons, in our opinion, from 1 January 2001 onwards, the trustee ceased to hold the trust estate pursuant to a discretionary trust, and held it on the terms of a fixed trust. The incidents of the new fixed trust are considered next. 35. From the Vesting Day onward, the trust beneficiaries obtained a vested interest in the trust estate. That interest was vested in interest and possession as to capital, and as to income earned and available for distribution from time to time (and with some rights as well in respect of the gross income earned). The distributable income may well be different in amount to the taxable income of the trust. [A14] The position was otherwise prior to vesting, for the trustee was entitled to distribute only part or all of the taxable income of the trust (see the definition of "nett income" in clause 1(k)). 36. It may be noted, also, that after the Vesting Day the beneficiaries' right to income earned from time to time is an incident of his or her ownership of the trust capital (equitable title to the assets extending to ownership of its fruits), and does not derive from the exercise of a power of appointment on the part of the trustee, as was the case prior to the vesting. 37. Looking next at the powers and discretions of the trustee after the Vesting Day, from 1 January 2001, the trustee ceased to have both the power of appointment conferred by clause 3, and the special power or right conferred by the fourth and fifth lines of clause 4. The trustee may, instead, properly deal with the trust capital and income only in a manner consistent with the ownership interests of the two beneficiaries. [A15] 38. Equally, in our opinion, on and from 1 January 2001 the trustee will become subject to the ordinary duties of a trustee of a private fixed trust, to safeguard the trust estate, and to deal with it only on the terms of the trust. | Consequence of mistaken distributions of trust income after the Vesting Day: 39. The distinctive feature of the fact pattern now being considered is that the trustee continues to believe that the discretionary trust continues, when in fact that trust has ceased to apply, and has been replaced by a new fixed trust on quite different terms. 40. What are the rights and obligations of the trustee and beneficiary in such a case? The simplest case involves the actual payment of money by the trustee, to one beneficiary, in an amount that exceeds what that beneficiary was in fact entitled to under the terms of the fixed trust: for example, if the trustee were to pay all of the net income to one beneficiary in the mistaken belief that it still enjoyed a discretionary power of appointment. In fact, all other things being equal, the trustee should have either paid half of the distributable income to each beneficiary or accumulated the income in its own hands (recording it as an accumulation owned equally by both cestui que trust). 41. If the trustee were to overpay one beneficiary in this way, then in our opinion: [A16] 42. The matrix of obligations just described is adapted to undoing the unauthorised overpayment. The payment itself took effect not because of a power of disposition given by the instrument of trust (which indeed gave no right to make the payment), but was instead effective because the trustee's ownership of legal title to the trust fund carries with it a power to pay trust income away. If what the trustee had done to appoint the income falls short of actual payment (or other disposition effective at common law), and would instead be capable of taking effect only in equity, in our opinion that conduct is of no effect at all, if not authorised by the trust. The position is quite unlike the exercise of an actual power of appointment in a manner having unintended fiscal or other consequences. [A19] In the fact-pattern being considered, the trustee lacks any power at all to make the disposition, for the power of appointment formerly reposed in him has, since the vesting date, been taken away. Insofar as the language of "void" and "voidable" is to be employed, in our opinion it is plain that the purported disposition is properly described as void and not voidable. [A20] 43. The underpaid beneficiary could not ratify the trustee's breach of trust in the sense of giving authority to appoint income where none otherwise existed. However, in our opinion he or she could validly agree to the overpaid beneficiary retaining the overpaid monies and to release the trustee from any claim arising from the mistake. 44. Where: the correct legal characterisation of the action of the underpaid beneficiary is, in our opinion, a gift of the overpaid sum made by the underpaid beneficiary to the overpaid beneficiary. 45. We consider that this is likely to be correct characterisation of the fact pattern for the following reasons. In the posited scenario, when the mistaken trustee made the overpayment, legal title to the overpaid monies passed to the overpaid beneficiary. [A22] However, prior to the agreement and release referred to in 44(c) above, the underpaid beneficiary held an equitable interest in the overpaid monies that arose on and from the time the overpayment was made. For his part, on and from the moment the overpaid monies were received, the overpaid beneficiary held those funds on trust for the underpaid beneficiary, and enjoyed no equitable proprietary interest in them. On the assumption that the overpaid monies remained traceably identified in the hands of the overpaid beneficiary at the date of the agreement and release, following the agreement and release referred to 44(c) above, the overpaid beneficiary had a complete title to the overpaid monies, and the underpaid beneficiary retained none. No consideration has been provided by the overpaid beneficiary. In the result, the proper characterisation of the effect of the agreement and release on the facts posited is, in our opinion, that of a gift by the underpaid beneficiary, of his or her equitable interest in the overpaid sum, to the overpaid beneficiary. We do not consider that the arrangement can be characterised as one where the settlor (or the trustee) has made the gift, or where the gift has come merely from the trust estate itself, [A23] for that characterisation does not sufficiently reflect the circumstance that, before the arrangement being discussed, beneficial ownership of the overpaid sum rested with underpaid beneficiary. 46. What of the circumstance where, at the time of the agreement and release, there remains no traceably identifiable product of the overpaid monies in the hands of the overpaid beneficiary; for example, because the funds were paid into an overdrawn bank account, or were all spent in a way that left no corpus over which equitable title might be asserted? In that scenario, the effect of the agreement and release [A24] will be to extinguish the personal obligation in the overpaid beneficiary to repay the overpaid sum to the trustee, the trustee's right to recover the overpayment, and the other rights and obligations arising by operation of law to undo the consequence of the unauthorised payment, and which are summarised in paragraph [41] above. The language of "gift" fits less comfortably in this scenario, for the reason that, unlike the fact-pattern just discussed (where the money or its product remains identifiable in the hands of the overpaid beneficiary), the overpaid beneficiary has not acquired a new proprietary interest that is equal to the interest given up by the underpaid beneficiary. 47. It is, however, apparent that the overpaid beneficiary has obtained new rights of value, and the underpaid beneficiary has lost accrued rights of value. The overpaid beneficiary is no longer indebted to the trustee in the amount of the overpayment. The underpaid beneficiary no longer has enforceable claims in respect of the overpayment (viz. to require the trustee to reinstate the trust fund in the amount of the overpayment by recourse to his own assets, or requiring him to recover the overpayment from the overpaid beneficiary, or, insofar as such a claim may be available, against the overpaid beneficiary directly, by way of a re Diplock claim). Looked at in terms of the effect of the rearrangement of rights following the contemplated agreement and release, the overpaid beneficiary has received a gift of the overpaid sums, and has done so by reason of the agreement and release. Whether the putative donor is to be regarded as the underpaid beneficiary, or the settlor or trustee himself, might conceivably turn upon the particular circumstances of the case, but it would seem to us likely that in most cases, the donor will be the underpaid beneficiary, for the net effect of the arrangement is that his entitlement to and in the trust estate (howsoever enforceable) is reduced, and that of the overpaid beneficiary is pro tanto increased. Did the conduct of the trustee and beneficiaries from 2 January 2001 to 30 March 2014 extend the Vesting Day (because the fact that the trustee and beneficiaries have acted as if the trust were continuing is evidence that there was an implied exercise of the power to extend the Vesting Day)? 48. In our respectful opinion the argument just noted is plainly wrong. The fact that after 1 January 2001 the trustee and beneficiaries continued to conduct their affairs on the footing that the discretionary trust continued in force (being ignorant of the change effected by clause 4) does not have the consequence that the Vesting Date is extended. Clause 4 was self-executing and was triggered by the effluxion of time. The consequences effected by the clause occurred automatically on 1 January 2001, and irrespective of the knowledge or intention of the trustee and beneficiaries (each of whom had anyway effectively pre-agreed to the regime imposed by clause 4 by consenting to be bound by the trust deed). 49. In any event, as will appear, in our opinion, after 1 January 2001 there was no power to extend the Vesting Date conferred by the trust deed. There was, therefore, no power of extension to be exercised by the trustee and beneficiaries, either expressly or by implication from their conduct. 50. It should be added, for completeness, that we have considered the argument expressed in the paper "Vesting of Trust Deeds" (30th National Convention of the Tax Institute, March 2015) (at 5.1.7) that is briefed and to which those instructing us have referred. We respectfully consider this argument to be wrong, and that the reasoning in Cajkusic v Cmr of Taxation [2006] FCAFC 164; (2006) 155 FCR 430 at [20] on which the paper relies, does not support the argument advanced. | Did the Deed of Variation executed on 31 March 2014 alter the Vesting Day to 2030?: 51. In our opinion, the instrument of variation did not alter the Vesting Day for the following reasons. 52. The power to amend the trust deed is set out in clause 16 (and see also clause 25). Clause 16 provides as follows (emphasis added): 53. In our opinion, the effect of clause 16(c) is that the trustee does not have a power or authority to revoke add to or vary any provision of the trust deed to the extent doing so would "affect" any interest which has "vested" prior to the date of the purported variation, alteration or addition. For the reasons explained earlier, in our opinion clause 1(c)(iii) should be construed consistently with clause 16(c), and so read as permitting alteration of the Vesting Day only before the trust in fact vests. 54. The effect of clause 4 was to vest new proprietary interests in the trust beneficiaries, on and from 1 January 2001, in the manner previously discussed. 55. Accordingly, in our opinion, on and from 1 January 2001, the trust deed became incapable of being altered by the trustee in a way that would "affect" the interests so vested. 56. The question arising is whether varying the Vesting Day would have that effect. 57. In our opinion, the answer is, plainly "yes". After 1 January 2001, purporting to alter the Vesting Day to some later point in time "affected" an interest which has "vested" prior to the date of the purported variation, within the meaning of clause 16(c). That is because purporting to alter the Vesting Date to some later date necessarily required the beneficiaries' interest in the trust estate, which vested on 1 January 2001, to be transformed into a contingent, discretionary interest of the kind enjoyed by a discretionary object (para [27] above). 58. For these reasons, in our opinion, on and from 1 January 2001 the trustee had no power to extend the Vesting Day, and the Deed of Variation executed by the trustee on 31 March 2014 was not effective to alter the Vesting Day to 2030 or to any other date. 59. We would add that, in our opinion, even if the trust deed did not contain a clause in the terms of 16(c), it would be a surprising construction of the instrument for it to be interpreted as giving a power to the trustee to retrospectively alter the vested beneficial interests of the cestui que trust: which seems to us to be a necessary consequence of a subsequent alteration of the vesting date. 60. On that construction of the deed, from the vesting date the beneficiaries would have particular proprietary interests, but the trustee could at a later date retrospectively alter those proprietary interests, transforming them as from the date of their creation, into merely discretionary interests (and correspondingly enlarging the trustee's own powers). In our opinion a court would be reluctant to find that that was the presumed intention of the settlor. It is not only that the retrospective alteration of rights of property is conceptually difficult, but the practical consequences include the prospect that transfers of capital or payments of income that were valid when made could become invalid and in breach of trust; tax might be levied and paid on a basis subsequently falsified; and conduct which was lawful when engaged in could become retrospectively unlawful (and vice versa). The advice will return to this point again, in considering questions 3 and 8(f). | Particular questions: 61. We now turn to consider the specific questions on which our opinion is sought. 62. Questions 1 to 7 will be set out first: 63. In our opinion, the answers to each of those questions are as follows. 64. In relation to question 1: 65. In relation to question 2: the execution of the Deed of Extension was not effective to change the Vesting Day, for the reasons explained earlier. 66. As to question 3: We are not presently able to see in what circumstances a trustee might conceivably be capable of changing a vesting day after the original vesting day had passed. 67. Some of the practical difficulties that would flow from an ex post facto changing of the vesting date were noted earlier (para [60] above). If clause 16(c) of the Trust had provided instead that the trustee could, after the Vesting Day, by instrument in writing fix a new and later Vesting Day, consideration would have to be given to what were the parties' true rights when the Vesting Day arrived. If this new clause 16(c) was capable of taking effect according to its terms, then from 1 January 2001, the trust beneficiaries would own the trust estate as tenants in common, but only defeasibly, subject to a power in the trustee to retrospectively extinguish that title and to replace it with a discretionary interest (and to correspondingly increase the trustee's powers and discretions). In such a case the beneficiaries' right to receive and retain income or other trust property after the vesting date would be uncertain, because that right would be conditional upon the trustee not subsequently altering the vesting date. No beneficiary would be able to safely deal with any income or other trust property received after the vesting date, for the receipt would be pregnant with the risk that it could subsequently become unauthorised and improper. Consideration might also have to be given to the effect of such a clause on the rule against perpetuities. 68. In relation to question 4: in our opinion, in general a Court has no power to extend the vesting date for a trust after its expiration. A court has no power at general law to alter or amend the terms of a trust instrument: Re Dion Investments (2014) 87 NSWLR 753 (CA) at [48]. A number of authorities had held that the power of the Court in provisions such as s81 of the Trustee Act 1925 (NSW) to confer on trustees power to effect (inter alia) a "transaction" which was, in the opinion of the Court, expedient but could not be effected by reason of a lack of power of the trustee, authorised the Court to empower the trustee to amend the trust deed by extending the vesting date: see eg., Stein v Sybmore Holdings Pty Limited (2006) 64 ATR 325 at [45]-[46], Barry v Borlas Pty Limited [2012] NSWSC 831. A like position was reached in relation to analogous provisions in other states: see Re Arthur Brady Family Trust; Re Trekmore Trading Trust [2014] QSC 244 (concerning s94 of the Trusts Act 1973 (Qld)). 69. However, in our opinion, since the decision of the Court of Appeal in Re Dion, the earlier decisions that had held that s81 of the Trustee Act 1925 (NSW) authorised a Court to empower a trustee to amend a trust deed by extending the vesting date, must be taken to have been disapproved. The effect of the Court of Appeal's decision is that the reference to "transaction" in s81 of the Trustee Act does not include an amendment of a trust deed, except to the extent it is a procedural step to effect a specific dealing (at [94]-[96]). In the circumstance currently under consideration, there is no specific dealing for which a procedural step requires amending the trust deed to effect the dealing. As presently instructed, we find it difficult to imagine a scenario in which altering the vesting date after the trust has vested according to its terms, would be a procedural step to effect a specific dealing. 70. In our opinion, the same result will likely obtain in other States in relation to provisions analogous to s81 of the Trustee Act 1925 (NSW). This is so despite some differences in the wording of those provisions, and despite first instance decisions to the contrary pre-dating Re Dion. Thus, while the Court of Appeal in Re Dion adverted to some differences between s81 of the Trustee Act (NSW) and s94 of the Trusts Act 1973 (Qld) considered in Re Arthur Brady Family Trust (at [84]), in Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 at [186]-[183] Brereton J applied the conclusion in Re Dion to s89 of the Trustees Act 1962 (WA) (set out at [181]), which is in substantially identical terms to s94 of the Trusts Act 1973 (Qld) (see at [182]). We are reinforced in our view by the statement appearing in Jacobs Law of Trusts (8th Ed, 2016) at [17-06]. The learned authors there state, with reference to Re Dion and Hancock v Rinehart, the following general proposition in relation to all of the provisions in Australian jurisdictions that follow the form of s57 of the Trustees Act 1925 (UK): 71. In relation to question 5: in our opinion, unless there exists a clause in the trust deed providing for the trust to be "wound up" following vesting, or an immediate distribution is plainly contemplated by other terms of the deed, the trustee ought not to have a duty to wind up the trust after it has vested, by distributing all of the trust fund as soon as practicable after the Vesting Day. 72. Those instructing us have drawn attention to the reasons of Justice Anderson in Clay v. James [2001] WASCA 18 at [6] and [11]. In our respectful opinion those passages should be understood in the light of the particular trust deed before the court. It is apparent that the learned judge considered that clause 2 of the trust deed had the effect that upon the expiration of the "Trust Period" the duty of the trustee was to pay the amount of the trust fund in accordance with the settlement and otherwise to take all steps necessary to wind up the trust: at [6]. In our opinion whilst that may (or may not) be the correct interpretation of clause 2 of the deed before the court, the decision is not authority that in a fact pattern of the kind currently being considered, there is usually an implied obligation on the trustee to distribute the trust fund or to otherwise wind up the trust once it has vested. 73. So, for example, in relation to the Trust under consideration, the trust deed provides in clause 4 that upon the Vesting Day, if there are two surviving Specified Beneficiaries, then the trustee is henceforth to hold the trust estate for each of them as tenants in common in equal shares. In our opinion there is nothing in clause 4 that implies that the trustee must thereafter distribute the trust fund and so bring the trust to an end. Rather, in our opinion, the working assumption of clause 4 is that the trustee is obliged to continue to hold the fund on the trusts there set out. An implied obligation to distribute the fund to the beneficiaries would be a significant limitation upon the trust, and an important obligation upon the trustee. In our opinion, if this was the intention of the settlor, it could be expected to be made clear. 74. The instrument is also to be read as a whole, and if the other terms of the trust indicated that the trustee was required to distribute the fund upon vesting, it might be that a term to that effect could properly be implied. However, in our opinion, the terms of the Trust deed tell against that construction. By clause 6, whilst some of the trustee's discretionary powers are expressed to not survive vesting (for example, the power to lend trust money to the beneficiaries (clause 6(a)), and the power given by clause 7(x)), other powers contain no such temporal limitation, and this includes the trustee's power of investment (clause 7(a)). The juxtaposition of these two types of clause, the one limited to the period prior to vesting, and the other apparently intended to survive vesting, tends to suggest that the presumed intention of the settlor was that the trust would continue after the Vesting Day. 75. In relation to question 6(a): assuming that the incorrect appointment of income has been made by mistake, and has been accompanied by a payment of money, then: 76. A further discussion of the rights of the parties inter se is set out at paragraph [41] above. 77. In relation to question 6(b): the principles of general application are, in our opinion, those principles that are to be applied to any unauthorised and mistaken distribution by a trustee to a beneficiary. 78. The level of trustee knowledge or competence is, in our opinion, irrelevant to whether the trust has vested. If the trustee is in fact aware of or negligent as to the misapplication of trust money, that might be relevant to the extent of the beneficiaries' claims against the trustee, and to the availability of a defence of the kind established by section 76 of the Trusts Act 1973 (Qld) (whereby a trustee who establishes that he has acted honestly and reasonably and ought fairly to be excused may be relieved from liability). 79. As to question 6(c), and at the risk of restating matters familiar to those instructing us: 80. As to question 6(d): 81. Question 7 concerns the capital gains tax consequences in respect of CGT event E1 in section 104-55 of the ITAA 1936. For the reasons explained earlier, our preliminary view is that the transformation of the trust from a discretionary to a fixed trust, by operation of the trust deed itself, does not involve the creation of a trust over a CGT asset by declaration or settlement, if the key inquiry is whether there has been continuity of the trust of the kind discussed in FCT v Clark (2011) 190 FCR 206 (Full Ct) or whether the original trust has instead terminated. We would wish to consider this issue further before coming to a final view, and would be pleased to do so in a subsequent advice if required. 82. We are also asked the following further questions: 83. Our opinion in relation to these further questions is as follows: 84. We advise accordingly. | Michael O'Meara: 31 October 2016 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously released in draft form as TR 2017/D10


Income tax: trust vesting - consequences of a trust vesting: This opinion is published by the ATO to provide transparency about the legal advice it has received as part of the process of assisting the Commissioner to formulate the views expressed in TR 2017/D10 . | Summary - what this Ruling is about | NOT LEGALLY BINDING SECTION: | Summary - what this Ruling is about: 1. This Ruling explains the Commissioner's views about the immediate income tax consequences of a trust vesting and discusses certain issues that can arise when the vesting date of a trust is mistakenly thought to have been extended. | 2. While the trust deed may or may not specify how the trust is to be administered post-vesting, when a trust vests, all of the interests in the trust as to income and capital become vested in interest and possession. | 3. The income tax consequences that arise on, and after, the vesting of a trust depend on the terms of the deed. Vesting of itself may, but need not, cause a CGT event to happen. | Definitions: 4. In this Ruling, unless context otherwise requires: | Appendix 1 - Detailed contents list | "Apart from making adjustments to the terms of the trust or the rights of beneficiaries which are incidental to or consequential on the advantageous dealing, the court has no power to vary the trust". | 97 Beneficiary not under any legal disability | "Once the share of the distributable income to which the beneficiary is presently entitled is worked out, the notion of present entitlement has served its purpose, and the beneficiary is to be taxed on that share (or proportion) of the taxable income of the trust estate." | For the purposes of this Act, where a trustee has a discretion to pay or apply income of a trust estate to or for the benefit of specified beneficiaries, a beneficiary in whose favour the trustee exercises the trustee's discretion shall be deemed to be presently entitled to the amount paid to the beneficiary or applied for the beneficiary's benefit by the trustee in the exercise of that discretion.


Related rulings: TR 2006/10 TD 2012/21
Legislative references: ITAA 1936 ITAA 1936 Div 6 Pt III ITAA 1936 Div 6E Pt III ITAA 1936 95(1) ITAA 1936 95A(1) ITAA 1936 99 ITAA 1936 99A ITAA 1936 101 ITAA 1997 ITAA 1997 104-47 ITAA 1997 104-55(2) ITAA 1997 104-55(4) ITAA 1997 104-70 ITAA 1997 104-85 ITAA 1997 106-50 TAA 1953 Trustee Act 1925 (ACT) 81 Trustee Act (NT) 50A Trustee Act 1936 (SA) 59B Trustee Act 1936 (SA) 59C Trustee Act 1898 (Tas) 47 Trustee Act 1958 (Vic) 63 Trustee Act 1958 (Vic) 63A Trustees Act 1962 (WA) 89 Trustees Act 1962 (WA) 90 Trusts Act 1973 (Qld) 94 Trusts Act 1973 (Qld) 95 Variation of Trusts Act 1994 (Tas) 13 Variation of Trusts Act 1994 (Tas) 14
Case references: Clay & Ors v. James & Ors [2001] WASC 18