Practical Compliance Guideline

The Fact sheet clearly stated that we considered it was possible for section 100A to apply to dealings between family members. Also, that whether an arrangement will be considered as part of an ordinary family or commercial dealing will depend upon the facts and the circumstance of the particular arrangement and that merely dealing between members of a family group is not sufficient.

Following the release of the Fact sheet, we presented at numerous seminars, describing the types of arrangements that were being examined in our compliance activities.

The Fact sheet was used as the reference point of our compliance approach. It attracted significant attention in the tax profession and reiterated that we were carefully examining section 100A in our compliance activities.

Whether an arrangement is the same or not can only be determined by the facts.

An arrangement continues before and after 1 July 2014 where, under an agreement, a beneficiary became presently entitled to trust income before 1 July 2014 and under the same agreement becomes presently entitled to trust income on or after 1 July 2014.

Example 2 has been added to the final Guideline to explain this.

This Guideline sets out that we will follow the Fact sheet where it is more favourable than the Guideline in respect of entitlements that arose before 1 July 2022.

The Fact sheet provides a broad description of section 100A (including the ordinary family or commercial dealing exclusion and interaction with Division 7A) and identifies other relevant integrity provisions. There are 5 examples included to illustrate these.

The final Guideline sets out that we will not dedicate compliance resources to consider section 100A in respect of entitlements that arose before 1 July 2022, where taxpayers demonstrate to us that they have taken reasonable care in following the Fact sheet in determining that section 100A does not apply.

There are other scenarios not contemplated in the Fact sheet that the final Guideline addresses. It is not our intention to limit the final Guideline to what was already covered in the Fact sheet.

The view in the advice products (TR 2022/4 and this Guideline) does not represent a change in policy or interpretation and is consistent with how section 100A has been applied in compliance activities, private advice requests, objections and articulated in seminar presentations since 2014.

A dependant includes a beneficiary's child or stepchild under the age of 18 years or a person who is financially dependent on the beneficiary.

The circumstances surrounding why a beneficiary chose to gift or loan an amount to another party is fact dependant. It is not appropriate for the Guideline to set a bright line test of this nature.

Examples 8 and 10 of TR 2022/4 outline arrangements which concern gifts and non-commercial loans between family members in the context of section 100A.

Green zone: scenario 4 of the final Guideline includes arrangements relevantly identical to Examples 6 to 10 in TR 2022/4^[1] which conclude that the arrangement would likely be entered into in the course of ordinary family or commercial dealing.

Our experience with different scenarios concerning grandparents paying school fees for their grandchildren is that the level of risk where section 100A could apply depends on the facts and circumstances. While some arrangements are low risk and do not raise concerns, some appear to be contrived and considered by us to be high risk.

To make it easier to comply, we have split Green zone: scenario 3 into scenario 3A and scenario 3B of the final Guideline to separately list the principles that apply to individuals and companies or trusts.

Implementation and management of arrangements in Green zone: scenario 3 where it relates to:

•

corporate beneficiaries - should be a continuation of the status quo for the majority of trustees; that is, continuing to comply with Division 7A obligations

•

controllers, their spouses and those employed in managing the business - is intended to be straight forward; that is, provided the underlying funds continue to be used in the trust, it would be in the green zone.

Refer to our response at Issue 10 of this Compendium.

Green zone: scenarios 2 and 3B of the final Guideline would include arrangements where a trustee beneficiary has losses.

New Green zone: scenario 3A of the final Guideline does not state that a distribution to a family member will result in the green zone being failed.

Where an individual does not control a trust, is not the spouse of the controller or is not employed in the management of the business, we may require further information to ascertain the level of risk in respect of a beneficiary's unpaid entitlement.

Loans made that meet the requirements set out in Division 7A are accepted as being on 'commercial terms' (whether or not Division 7A actually applies to those loans).

We limited the 'use of funds' criteria in Green zone: scenario 3 so as to broaden that criteria to allow private use of funds which would involve additional criteria to delineate what is low risk, which would increase the complexity of the scenario.

Green zone: scenario 3 of the final Guideline sets out criteria where we do not require further information in accepting that an arrangement is low risk. Further information may be required to ascertain risk in respect of an arrangement that includes an interest-free loan made by the trustee.

New Green zone: scenario 3A of the final Guideline sets out criteria where we do not require further information in accepting that an arrangement is low risk. We limited the range of beneficiaries in Green zone: scenario 3A as a broader range of beneficiaries would involve additional criteria to delineate what is low risk, which would increase the complexity of the scenario.

Green zone: scenario 3 of the final Guideline sets out criteria where we do not require further information in accepting that an arrangement is low risk.

Where an individual does not control a trust, is not the spouse of the controller or is not employed in the management of the business, we may require further information to ascertain the level of risk in respect of a beneficiary's unpaid entitlement.

This Guideline does not prevent trustees distributing to other beneficiaries and borrowing funds from those beneficiaries. The narrowness of the green zone reflects that we would need to make further enquiries to assess the risk.

For consistency, the corporate beneficiary should also be able to be one that is controlled by the spouse of the controller of the trust.

•

control

•

'use of funds' in relation to indirect benefits

•

working capital

•

investment assets

•

maintaining' an investment asset

•

active business

•

associate.

We have removed some terms from the final Guideline and for others have defined those terms within the Guideline where they are not generally understood and aid in applying the Guideline.

In addition, the term 'associate' has been replaced in the final Guideline with the concept of a 'family group' as used in Schedule 2F. We considered this appropriate since many trustees and tax practitioners should be familiar with the provisions in Schedule 2F in managing their tax compliance obligations.

Scenario 3A, concerns trustees retaining funds in respect of the trust entitlements of particular individuals, covers both trusts carrying on a business and trusts that undertake investment activities. This is explained in paragraph 25(c) of the final Guideline.

Where an individual beneficiary is not in the scope of scenario 3A, further information may be required in considering any section 100A risk.

•

the use of funds to pay off a debt used to finance investments

•

the use of funds to pay off debt to an associate; it is uncertain from the associate's perspective whether they have benefited from the use of funds or merely replaced one asset (loan receivable) with another (cash)

•

the use of funds to repay intra-group loans to simplify loan arrangements of a group

•

the use of funds to repay a loan owed to another beneficiary or to pay an outstanding unpaid present entitlement (UPE) (that is, where it could be said that the loan or UPE was previously retained for working capital or investment purposes)?

Under the 'trustee working capital condition' in scenario 3 of the final Guideline, and subject to the other requirements in scenarios 3A and 3B of the final Guideline being satisfied, the green zone may apply to a trustee that uses funds to repay debt in the course of carrying on a business or repay debt used to acquire, maintain or improve investment assets.

To provide a better user experience, the final Guideline no longer includes the blue zone. Instead, the green zone has been expanded to cover a greater range of scenarios and the red zone is more clearly defined.

The exclusion from the green zone reflects that we may need further information to ascertain whether there is a risk that section 100A applies. Taxpayer Alerts TA 2013/1 Arrangements to exploit mismatches between trust and taxable income and TA 2016/12 Trust income reduction arrangements contain examples of where trustee powers have been exercised to create differences. The Federal Court in BBlood found that section 100A applied to a reimbursement agreement that involved a difference between trust law income and taxable net income - the difference was facilitated by an amendment made in the trust deed.

At paragraph 10(c) of the final Guideline, we have included an overt statement that there is no reimbursement agreement where there was no agreement, arrangement or understanding to provide the benefit at the time the beneficiary became presently entitled.

We accept the legal basis for excluding benefits that are not provided under a reimbursement agreement. We have made this clear in TR 2022/4. We have concerns about how, other than as a restatement of law, this can be converted into a risk filter suitable and easy to apply in the Guideline.

The Guideline does not create a blanket exclusion from the green zone for transactions involving the set-off of obligations between parties (including between a trustee and beneficiary).

Green zone: scenario 2 of the final Guideline states that a beneficiary will have received and used their entitlement where a beneficiary's trust entitlement is used to repay a liability of the beneficiary. While the scenario does not specifically mention set-offs, where a beneficiary borrows money from the trustee and the beneficiary uses its subsequent trust entitlement to repay that liability by way of set-off, this would be within the scope of the beneficiary benefiting from its trust entitlement in scenario 2.

This is in contrast to an exception to the green zone concerning beneficiaries making payments to trustees that are set-off against the beneficiaries' entitlements. Examples given include corporate beneficiaries paying dividends against the beneficiaries' trust entitlements or receipt of minimum yearly repayments. We recognise that arrangements such as this are not uncommon and pose a level of risk that will require a deeper understanding (before we can be satisfied there is a low risk of section 100A applying) than would be required for examples within the green zone.

The green zone is concerned with behaviours where we do not require further information in ascertaining that there is a low risk of section 100A applying.

Market value alone is not determinative of whether or not an arrangement is entered in the course of an ordinary family or commercial dealing.

Satisfying a trust entitlement through a set-off against paying a subscription for units in that trust will satisfy some of the basic elements of the definition of a reimbursement agreement and may mean we require further information to ascertain the risk concerning section 100A.

Furthermore, market valuations can be imprecise and may require closer examination by us.

We have updated paragraph 32 of the final Guideline with 3 more specific exclusions from the green-zone scenarios so that taxpayers and their representatives can understand the circumstances that will exclude an arrangement from the green zone.

These dot points, which expressed common traits of the red-zone scenarios, have been omitted in the final Guideline.

Paragraph 14 of the final Guideline includes a list of principles to guide you as to whether an arrangement may be lower or higher risk when it is not covered by the white, green or red-zone scenarios.

Paragraph 27 of TR 2022/4 has a list of matters that may be relevant to whether the ordinary dealing exception in subsection 100A(13) applies. These matters are included in the red-zone scenarios in the final Guideline.

We will update the Guideline as further arrangements come to light.

In relation to beneficiaries more generally gifting their entitlements, paragraph 32 of the final Guideline excludes this from the green zone which reflects the need to make further enquiries to assess the risk.

The circumstances surrounding why a beneficiary chose to gift or loan an amount to another party depends on the facts of the case. It is not appropriate for the Guideline to set a bright line test of this nature.

We acknowledge that there are circumstances in which an arrangement undertaken for asset protection can be an ordinary dealing. We have concerns about how, other than as a restatement of law, this can be converted into a risk filter suitable and easy to apply in the Guideline.

Whether a beneficiary chose to volunteer financial assistance or was coerced into doing so depends on the facts and surrounding circumstances of the case. It is not appropriate for the Guideline to set a bright line test of this nature.

We have concerns about how, other than as a restatement of law, this can be converted into a risk filter suitable and easy to apply in the Guideline.

Refer to TA 2022/1 which outlines our concerns with arrangements where inappropriate tax outcomes are obtained by accessing the tax-free thresholds and lower marginal tax rates of family members.

The Guideline does not require or imply that there be commerciality by members of a family group. Whether the family members have genuine asset protection, wealth creation or succession purposes depends on the facts of the case. It is not appropriate for the Guideline to provide an example that specifically describes every arrangement or variation thereof.

The circumstances surrounding why the beneficiary chose to repay another beneficiary's credit entitlement depends on the facts of the case. Therefore, we would need to make further enquiries to assess the risk.

Subsection 100A(10) explicitly includes a 'loan' within the definition of a 'payment of money' per subsection 100A(7).

Example 15 of the final Guideline concerns non-resident parents being made presently entitled to franked dividends where the resident son retains the use of the funds and the entitlements remain unpaid or are converted into loans. We see arrangements where the entitlements appear to be motivated by the non-resident beneficiary's tax preferred status while providing the use of those funds to a resident. Many of these arrangements involve situations where the funds are used to acquire assets that are not liquid, which will likely impede the non-resident's ability to receive the funds.

'funds that represent the entitlement are made available to the parent or other caregiver of the beneficiary by way of loan or gift (unless it is a loan made by the trustee that satisfies the 'use of funds condition' described in paragraph 21(b)(iii) of this Guideline).'

The final Guideline has been updated to make it clearer that the third point under Red zone: scenario 1 does not apply where Green zone: scenario 3A of the final Guideline is satisfied.

In reflecting on the suggestion, we are mindful that Green zone: scenario 3A of the final Guideline may lead to some behavioural change whereby children are made controllers of a trust merely to satisfy the scenario. We will consider it high risk (and therefore not within the green zone) where giving children control of a trust is simply to cause Green zone: scenario 3A to be satisfied.

Our concerns with appointing trust income to non-resident beneficiaries are reflected in Taxation Rulings IT 2344 Income Tax: trust schemes with non-resident beneficiaries: assessing guidelines : determination of objections : settlement guidelines and IT 2466 Income tax : trust distributions of group interest to non-resident beneficiaries : determination of objections.

We have updated Red zone: scenario 1 of the final Guideline to state that the non-resident beneficiary is a relative of the controller of the trust. This will significantly reduce any overlap between Green zone: scenario 3A and Red zone: scenario 1. While Green zone: scenario 3A of the final Guideline will generally take priority over Red zone: scenario 1 in respect of loans, we are monitoring behavioural change around increasing the number of individual controllers of a trust so that the arrangement may satisfy Green zone: scenario 3A.

In this type of scenario, subject to any additional facts or the application of any other scenarios in the Guideline, we may seek to ascertain:

•

why the beneficiary was made presently entitled

•

why that entitlement remains unpaid, and

•

whether there is a connection between the beneficiary's entitlement and the loan made by the trustee to another beneficiary, including the source of funds used by the trustee.

We encourage taxpayers to maintain records that would readily enable these questions to be answered and that support the timely resolution of any compliance activities.

We would encourage taxpayers to maintain records such as these to support their position and resolve compliance activity we undertake in a timely manner.

The arrangement involves an operating company that pays franked dividends each year to a discretionary trust, that discretionary trust appoints the franked dividend from the operating company to a corporate beneficiary wholly owned by the trust, a loan agreement is entered into between the trust and corporate beneficiary, the minimum yearly repayments are funded by franked dividends paid by the corporate beneficiary back to the trust, with the franked dividends paid by the corporate beneficiary then appointed to individuals.

The arrangement cannot satisfy the green-zone scenario in respect of the corporate beneficiary's entitlement to trust income. With the minimum yearly repayments from the trustee to the corporate beneficiary set off against the franked dividend paid by the corporate beneficiary, the green-zone exclusion at paragraph 32(e) of the final Guideline applies. Where we see a company made presently entitled to income in consecutive years and that company's trust entitlement or minimum yearly repayments being satisfied by way of set-off against dividends paid by the company, it poses the question as to why the company is made presently entitled since the subsequent dividend may suggest that the company has no need for the funds from the trust to which it was made entitled.

The red-zone scenario will not be satisfied where a different beneficiary is entitled to the income attributed to the franked dividend paid by the corporate beneficiary to the trustee.

The ATO should consider how Red zone: scenario 3 of the draft Guideline would apply to Collective Corporate Investment Vehicles (CCIVs) and consider treating this as low risk given CCIVs are highly regulated and would generally only be used in commercial dealings.

We do not accept that arrangements involving a deliberate mismatch between the income of the trust estate and the trust net income pose a level of risk below the red zone.

We have released 2 Taxpayer Alerts concerning differences between trust law income and taxable net income of trusts, being TA 2013/1 and TA 2016/12.

TA 2013/1 was concerned with differences explained by capital gains, while TA 2016/12 concerned trustees undertaking steps to create differences.

The red-zone scenario considers that section 100A risks can arise in respect of differences attributed to ordinary concepts as well as re-characterising income into capital.

The facts in BBlood involve a difference between trust law income and taxable net income attributed to share buy-back proceeds that are treated as a franked dividend for tax law purposes. The share buy-back proceeds are likely to be a capital receipt under ordinary concepts for most trusts.

We have updated Red zone: scenario 5 of the final Guideline to make it clearer that this scenario does not apply to beneficiaries who are members of the same family group as the distributing trust.

Furthermore, updated Red zone: scenario 5 does not apply where a green-zone scenario applies to a loss beneficiary's entitlement.

The examples in the final Guideline illustrate scenarios which explain our risk framework for which we determine whether to dedicate compliance resources. Given the risk focus, the examples in the Guideline intentionally do not deal with whether or not section 100A applies in the scenarios.

The purpose of this Guideline is to explain how we differentiate risk and how we manage that risk through our compliance approach to section 100A.

The relevance of a counterfactual is addressed in TR 2022/4.

We have updated the final Guideline to outline the facts within each separate example.

We note that BBlood concerned an arrangement that had a tax rate of about 30% (where franked dividends were included in the assessable income of a corporate beneficiary in the year ended 30 June 2014).

Taxpayers should consider whether their business structure will support them to best meet their needs and personal circumstances.

In the event that the trustee has insufficient funds to satisfy the UPE and instead used a dividend payment from the corporate beneficiary to service the UPE, this will take an arrangement outside of the green-zone scenario. Further information may be required to ascertain the risk of section 100A applying.

The Example should clarify that the source of the funding to pay the university or tuition fees of an adult beneficiary should not change the outcome and such arrangements should continue to be treated as low risk; for example, the beneficiary sources the funds to meet the cost of those fees either from a third-party deposit-taking institution or from their parents, then later directs the trust to repay the bank or their parents out of their trust entitlement. In either case, the source of the funds to meet the cost of the fees does not change the tax outcome.

While we recognise that the scope of arrangements involving trust distributions are very broad, we consider that it is not practical to provide examples that specifically describes every arrangement or variation thereof. We consider that the examples in the final Guideline to be sufficient to assist taxpayers in understanding the application of the risk framework.

Subsection 100A(10) explicitly includes a 'loan' within the definition of a 'payment of money' per subsection (7).

We would consider why Sylvia and Sylvester were made presently entitled when funds representing those entitlements flow in a different direction.

Also refer to Issue 39 of this Compendium.

Example 15 of the final Guideline has been updated to clarify that the beneficiary is a resident of Australia.

The Example should be clearer as to what tax benefit is being achieved and why section 100A should apply given the apparent mischief involved.

Thawley J in the decision in BBlood explains that '... section 100A does not operate by a mechanism which makes the identification of a specific amount of tax avoided a necessary component of identifying a 'tax avoidance' purpose.'

For example, if an arrangement is intended to provide a benefit to a particular person and that person sought to disguise the benefit by transferring an asset to the presently entitled beneficiary for market value consideration, there is still the possibility the arrangement does not satisfy the ordinary dealing exception.

Noting the criteria for Red zone: scenario 3, a bilateral agreement for issuing units at market value would not satisfy that scenario.

It is considered realistic that a trustee may not make a family trust election where there is a potential negative tax consequence attributed to making an election.

Paragraph 14 of the final Guideline sets out matters that attracts our attention in dedicating compliance resources. The first matter mentioned is that someone else benefits.

Example 6 of TR 2022/4 also includes a testamentary trust example with the Guideline stating in Green zone: scenario 4 that any arrangement that is relevantly identical to an example in that Ruling, which concludes that the arrangement would likely be entered into in the course of ordinary family or commercial dealing.

The final Guideline includes, in Green zone: scenario 4, those arrangements that are relevantly identical to Examples 6 to 10 in TR 2022/4^[2], which conclude that the arrangement would likely be entered into in the course of ordinary family or commercial dealing. That Ruling does include examples concerning gifts and non-commercial loans.

It is to be noted that it is not possible to provide examples covering all situations as there is a need to balance coverage with likelihood. Taxpayers with unique circumstances should engage with us if they require certainty regarding their arrangements.

This is in contrast to an exception to the green zone concerning beneficiaries making payments to trustees that are set-off against the beneficiaries' entitlements. Examples given include corporate beneficiaries paying dividends or subscribing for units in a trust which are set-off against the beneficiaries' trust entitlements. The underlying concern is that such set-off arrangements may not see the beneficiary being genuinely better off to the extent that the entitlement has been set-off against the payment. This underlying concern reflects why we may need further information in considering any section 100A risk.

•

where the trust distribution is immediately paid to the company, and

•

where the trust distribution is not immediately paid to the bucket company but is put onto a Division 7A loan agreement so the trust can use the funds as working capital.

Examples 11 and 12 of the final Guideline outline arrangements where a trust distribution to a private company is not immediately paid and then loaned back to the trust.

Further, the green-zone scenarios in the final Guideline illustrate arrangements that are low risk where there is a lesser likelihood of us applying compliance resources because they may be considered to be entered into in the course of ordinary family or commercial dealings.

The Ruling outlines our interpretation of trust arrangements that meet the scope of an 'ordinary family or commercial dealing' and the final Guideline discusses our risk-based approach to those arrangements.

We have historically maintained, in the Fact sheet and public forums, that the question of whether an arrangement was entered into in the course of ordinary family or commercial dealing will be assessed or determined on a case-by-case basis taking an objective view of all of the relevant facts and circumstances, and that merely because all parties to a dealing are family members will not suffice for the dealing to be considered part of an ordinarily family dealing.

We have described the types of records that will support taxpayers to help resolve compliance activities in a timely manner.

The purpose of the Guideline is to explain our risk framework for which we determine whether to dedicate compliance resources.

Within this context, the Guideline supports taxpayers to better understand the types of records that will support them to demonstrate that an arrangement is within the green zone.

For further information on record keeping, refer to the final Guideline and web guidance.

The Guideline sets out how the ATO differentiates compliance risk for a range of trust arrangements to which section 100A may apply by providing a risk assessment framework with examples of the arrangements that will attract our attention, identify those arrangements that are in a safe zone and when we will not seek to apply compliance resources.

As section 100A is based on the individual facts and circumstances of a case, it does not lend itself to a bright line test resulting in a set safe harbour.

•

We have clearly articulated in this Guideline and public forums that the Fact sheet can be relied upon for entitlements arising before 1 July 2022. This will continue to be our position.

•

The view in the advice products does not represent a change in policy or interpretation and is consistent with how section 100A has been applied in compliance activities, private advice requests, objections and seminar presentations since 2014.

We will also continue the practice of presenting new case typologies to the General Anti-Avoidance Rules (GAAR) panel before section 100A is applied to those typologies.

We will consider what further governance processes are appropriate to ensure that section 100A is not applied inappropriately where a taxpayer's affairs are otherwise being considered outside the period of review or where a taxpayer claims that they have taken reasonable care in applying the Fact sheet to determine section 100A did not apply to their to entitlement arising before 1 July 2022.

The Guideline should contain guidance as to when the ATO will use the unlimited amendment period. A suggested approach is within 4 years of lodgment except in most serious cases with fraud, evasion or blatant anti-avoidance.

Also refer to our response to Issue 83 of this Compendium.

•

the examples and commentary in the Fact sheet were very fact and case specific

•

some examples only dealt with high-risk cases of section 100A

•

other examples included facts which (in most cases) would be different to an actual taxpayer's circumstances.

To provide certainty, the reference to an arrangement reflected in an administrative position of the Fact sheet should be clearer.

Where a trustee demonstrates to us that they have taken reasonable care in relying on the Fact sheet concerning why section 100A does not apply in respect of an entitlement arising before 1 July 2022, we will not dedicate compliance resources to consider section 100A.

Also refer to our response to Issue 83 of this Compendium.

There are some differences in the wording in TR 2022/4 and this Guideline in relation to the date of effect as that Ruling is our view of how the tax laws apply, whereas the final Guideline sets out the risk assessment framework and our compliance approach to a range of trust arrangements to which section 100A may apply.

Throughout the extended consultation period, we have sought and considered a wide range of feedback and we have taken it all into account in the final Guideline to promote certainty and provide transparency of our views to the community.

The imposition of penalties and interest will be considered on a case-by-case basis in line with our standard practices and procedures.

We encourage taxpayers to inform us of mistakes by making a voluntary disclosure. If you make a voluntary disclosure, you can generally expect a reduction in the administrative penalties and interest charges that would normally apply.

For more information, see Voluntary disclosures in the approved form .

•

Division 7A

•

the Fringe Benefits Tax Assessment Act 1986

•

CGT event C2 in section 104-25 of the Income Tax Assessment Act 1997.

However, we note that with respect to Division 7A, we have stated in paragraph 38 of TR 2022/4 that in the case of a corporate beneficiary, where the entitlement is taken by section 100A not to have arisen, there will be no entitlement which could be the subject of a loan to the trustee under section 109D. Division 7A in those circumstances would not operate in respect of the entitlement.

Section 100A is a specific integrity rule that applies to certain reimbursement arrangements and Part IVA is a GAAR that is applied as a provision of last resort. The application and operation of section 100A is not on 'all fours' with Part IVA so it cannot be said definitively that the GAAR will apply to most, if not all, arrangements to which section 100A would apply.

However, in this instance our view does not represent a change in policy or interpretation and is consistent with how section 100A has been applied in compliance cases, private rulings and objection decisions since at least 2014. Our view has also been publicised in seminar presentations since at least 2014. The advice products exist within a larger framework of administrative measures that have been used to promote certainty and confidence in the administration of the law. These include a Taxpayer Alert (TA 2022/1), web guidance, training and education.

We partnered with the professional associations to run numerous information sessions on the draft Guideline when it was released in February 2022. A variety of virtual and face-to-face sessions were held, largely in a webinar, panel or Q&A style format. We also spoke at numerous professional body events about the advice products.

On finalisation of the advice products, we will renew our focus on supporting the professional associations to educate practitioners to ensure they have a clear understanding of the final Guideline.

Paragraph 53 of TR 2022/4 acknowledges that the decision in Guardian is a current source of law that has been taken into account. TR 2022/4 includes a summary of the case and identifies where we maintain views being contested in the appeal of this decision as appropriate.

Where we form the view that a present entitlement to trust income arose from a reimbursement agreement, the case team supported by a relevant technical branch, will follow the due decision-making process before an assessment (or amended assessment) can be issued.

Since 2017, we have had a practice that where a new section 100A case fact pattern is identified, it is presented at a special sitting of the GAAR panel for their consideration and guidance. Since then, section 100A has not been applied unless the case satisfied a typology that had been presented to the GAAR panel.

We will continue this practice of seeking GAAR panel oversight on a fact pattern basis. We have adequate internal processes and review mechanisms to effectively understand when cases might not be covered by existing GAAR advice. We will work on giving sufficient visibility to the market on new and emerging trends that we identify as a concern.

We appreciate that the application of section 100A, an anti-avoidance provision with an unlimited period of review, must not be applied without sufficient oversight.

We will consider what further governance processes are appropriate to ensure that section 100A is not applied inappropriately where a taxpayer's affairs are otherwise being considered outside the period of review or where a taxpayer claims that they have taken reasonable care in applying the Fact sheet to determine section 100A did not apply to their entitlement arising before 1 July 2022.

This Guideline should be read in conjunction with TR 2022/4, which sets out our interpretative position on the application of section 100A. An agreement may be inferred from the surrounding circumstances or the conduct of the parties. Where a present entitlement arises from an agreement or a payment or application of trust income resulting from an agreement, naturally, the relevant agreement must be in existence at the time when the present entitlement arises, payment is made or funds applied. However, that existence can also be established by evidence of the conduct of the parties before and after that time.