Case M46

Judges:
MB Hogan Ch
P Gerber M
GW Beck M

Court:
No. 3 Board of Review

Judgment date: 16 July 1980.

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M.B. Hogan (Chairman); Dr. P. Gerber and Dr. G.W. Beck (Members)

This reference raises the same issue as was considered by the Board in Case M45,
80 ATC 316.

2. The ``evidence'' was less satisfactory than the evidence in the reference heard earlier; the representative of the taxpayer informed the Board that, in the case of this reference, he had ``been a bit careless'' and that ``there were no minutes of the meeting in the minute book''. He went on to say that he ``would have had a meeting with the directors of that company but there are no minutes''. The matter proceeded by grace of the Commissioner's counsel who agreed to the following facts:

• (i) ``there was a meeting held whereby a resolution was made to pay the money to the beneficiary''; and
• (ii) ``the money was in fact paid (by the trustee) to the beneficiary''.

The arguments advanced on behalf of the taxpayer in Case M45, 80 ATC 316, were adopted by the taxpayer's representative in this reference, reliance being placed by counsel for the Commissioner on the arguments advanced for the Commissioner in Case M45 with the additional point being made that, in the case of
Union Fidelity Trustee Co. of Australia Ltd. v. F.C. of T., 69 ATC 4084, Barwick C.J. ``did not even consider section 101''.

3. We are of the view that the decision reached by us in Case M45 governs this rererence. The Settlement Deed dated 29 August 1974, contains the following provision in cl. 2:

``Until Vesting Day the Trustee shall stand possessed of the Trust Fund Upon Trust as to the income thereof for the Beneficiaries, or any one or more of them exclusive of the other or others in such shares and proportions as the Trustee in its absolute discretion may from year to year determine.''

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ATC 323

On the agreed facts, the trustee paid, in exercise of this power, an amount of $3,500 to bank accounts in the names of each of two minor beneficiaries. It is not disputed that the payments made by the trustee are payments of a type falling within sec. 101 of the Assessment Act, being payments made by a trustee in exercise of a discretion, to beneficiaries in whose favour the trustee has exercised the discretion. In respect of such payments, each beneficiary is deemed by sec. 101 to be presently entitled to the amount to him and her in the exercise of that discretion. They are indelibly classified as presently entitled by the deeming action in the provision and therefore fall to be assessed under sec. 98 of the Act.

4. We would confirm the Commissioner's assessments, the two notices in respect of which issued on 4 December 1978.

Claim disallowed