Recorded Webinar: Disclaiming an Entitlement to Trust Income? You May Need to Leave Your Tax on the Way Out

The recent High Court decision in FCT v Carter has changed the interpretation of when a disclaimer by a beneficiary of an interest in trust income is effective for tax purposes. The decision may lead to some unpleasant outcomes for beneficiaries taking this course of action. This session delves into the tax implications of such disclaimers, including:

• The then and now:
  • background to the ATO’s views (ATO ID 2010/85)
  • review of FCT v Carter [2022] HCA 10
• The types of situations where beneficiaries may feel the need to disclaim their interests
• If a trustee acknowledges a disclaimer of a beneficiary’s interest in income, who pays the tax on that income?
• Why trustee income distribution resolutions can be ineffective, reverting tax on trust income to the trustee or default beneficiaries
• How a default beneficiary can effectively disclaim a trust interest for tax purposes
• Action to take if a beneficiary wishes to be removed from their association with a trust
• The CGT implications of:
  • a surviving spouse disclaiming a share in spouse’s deceased estate in favour of the children
  • a surviving spouse disclaiming a life interest in favour of the children
  • a beneficiary of a discretionary trust renouncing their interest (TD 2001/26)
• Case study – control of trust to daughter with son wishing to step away