High Court hands down Bamford decision but the questions remain
The High Court has handed down it's decision in the case of Bamford vs ATO but the result is more questions exist now than ever before. The High Court agreed with the ruling of the lower courts in that a Trust Deed can determine how income is treated. This is a win for taxpayers that have trusts and who wished to treat capital gains as income and a loss for the ATO who contended capital gains could not be considered anything else but captial gains.
On the down side for the taxpayer they lost a complicated argument about the interpretation of how beneficiaries "shared" income. The taxpayers case was that a share of income was a fixed sum that could not be altered (often called the quantum approach) while the courts determined that the term "share" is a proportion or percentage (known as the proportionate approach).
The ramifications for both sides are still being assessed but everyone agrees the decision has left the situation more complicated than ever and that the government needs to step in to put clearer legislation in place so all parties can operate with greater ertainty.
There will be more discussion of this case when the full impact of the High Court ruling is analysed further.
Back
