We're a Baker Tilly network member
Learn more
Back to top
ATO finalises guidance on the anti-avoidance provision dealing with trust distributions (section 100A)
Technical article

ATO finalises guidance on the anti-avoidance provision dealing with trust distributions (section 100A)

The ATO has finalised draft guidance on the application of section 100A to trust entitlements, staying close to the original released earlier this year.

The finalisation comes despite two cases (both for and against the Commissioner) currently on appeal to the Full Federal Court. The guidance provides a very stringent view by the ATO on what may fall within the scope of section 100A. This may create significant risks with respect to trust distributions that will need to be managed very carefully.

The ATO has finalised its section 100A guidance, comprising Taxation Ruling TR 2022/4 (view here) and Practical Compliance Guidance PCG 2022/2 (“PCG 2022/2”) (view here).

These documents do not significantly depart from the draft versions that were the source of much debate when they were originally released (view the article here). While the ATO had been silent on the operation of the provision for almost 40 years, the ATO’s preliminary view was broadly that the provision would apply to trust distributions where the benefit was not otherwise only provided to the recipient beneficiary (resulting in 47% tax to be paid on such distributions).

Following the release of the draft guidance, Pitcher Partners provided a detailed submission to the ATO on its concerns regarding the breadth of the ATO view and in particular the limited low risk scenarios (i.e. the green zone scenarios) contained the guidance. We also raised our concerns about the retrospectivity of the ruling and lack of guidance for many arrangements common for private groups (read it here).

There have been a few additions to the guidance products, including the expansion of green zone scenarios to cover trust-to-trust distributions and where there is a time lag between the entitlement arising and the satisfaction of that entitlement. Unfortunately, the ruling still applies retrospectively to trust entitlements that arose prior to 1 July 2022.

The ATO has also provided some further insight into submission questions raised in the accompanying compendiums that contain the ATO responses to the feedback received on the draft products.

What are the next steps?

In addition to the retrospective nature of the products, the new products will have a significant impact on 30 June 2023 trust distributions . Pitcher Partners intends to provide further guidance (both in bulletins and through presentations) on managing trust distributions in accordance with these ATO products.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

Our experts

Simon Chun

Simon Chun

Partner

Brisbane


View profile
Stuart Dall

Stuart Dall

Partner

Melbourne


View profile
Michael Minter

Michael Minter

Managing Partner

Newcastle and Hunter


View profile
Leon Mok

Leon Mok

Managing Director

Perth


View profile
Allan Mortel

Allan Mortel

Partner

Sydney


View profile

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
CPN Enquiry
Business Radar 2024
Tax facts 2023-24
Student careers 2023-24
Search by industry