Date posted: 05/05/2022

Chartered Accountants: ATO should re-draft discretionary trust guidelines

Chartered Accountants Australia and New Zealand has called on the Australian Taxation Office (ATO) to work with the professional bodies on a second draft of its proposed guidance on family discretionary trust distributions (s100A), particularly in relation to possible retrospectivity and to provide more certainty on tax outcomes. 

Michael Croker, CA ANZ’s Tax Leader, said CA ANZ’s submission reflected concerns of CAs in public practice, particularly their fear that the ATO has belatedly weaponised s100A with retrospective effect, potentially impacting trust distributions made years ago. 

“The last time we heard from the ATO on this topic was a few examples posted on the ATO website back in 2014.” 

Mr Croker said his organisation’s members disagreed with the ATO’s position that the draft guidance does not represent a change in the ATO’s views.  

“If that is the case, why has the ATO taken so long to tell us all this detail now contained in the draft guidance? Why has the ATO now published pages and pages of risk-based, colour-coded examples of what is considered acceptable, ‘grey’ and unacceptable?”  

He said the ATO’s understanding of how Australian families and family businesses utilised their trusts under current guidance could be interpreted highly subjectively.  

“With no seat at the kitchen table, ATO outsiders must determine what is ‘ordinary’ by reference to insights based on their life experience and understanding of how Australian families and family businesses should operate,” Mr Croker said. 

“Our members point to the equivocal wording in the ATO draft guidance and seek much greater certainty about the outcome under the legislated safeguards for ordinary dealings.  

“CA ANZ’s view is the current caretaker period provides an opportune time to revisit and re-draft the guidelines and following the election period, for the ATO to reconvene a consultation forum whose objective is to defuse the angst within the tax professional community and their discretionary trust client base. 

“The ATO needs to demonstrate it has listened and is willing to formally respond to the concerns expressed by tax professionals and their clients.” 

Mr Croker said it was also possible the controversy could move from tax administration to the tax policy arena post-election.  

“From a policy, administrative and compliance standpoint, s100A is currently unsatisfactory for all concerned.” 

Related submssion

CA ANZ submission on ATO draft guidance on s100A

Read submission


For more information contact: 
Daniel Webster, Chartered Accountants Australia and New Zealand 
M +64 27 282 6253 
[email protected] 

About Chartered Accountants Australia and New Zealand 
Chartered Accountants Australia and New Zealand represents more than 131,000 financial professionals, supporting them to make a difference to the businesses, organisations and communities in which they work and live. Chartered Accountants are known as Difference Makers. The depth and breadth of their expertise helps them to see the big picture and chart the best course of action. 

Search related topics