Having examined the Whiting formulation, which requires for present entitlement to be created a beneficiary must have the right to demand a distribution from the income of the trust. We then discussed the inherent problem with this formulation, which is in order to call an amount, you must first know what the amount is. This creates further difficulties with section 101 of the Income Tax Assessment Act 1936, which does not deem present entitlement unless it is paid or applied, which is difficult to do if the amount is not known.
Then we examined Chianti which added the requirement for an admission of the amount to be distributed in order to create an action for money had or received. This is a departure from the common understanding of present entitlement. Next, there is the issue with the trustees right the indemnity that prevents the present right to call upon the income hence this creates a further present entitlement difficulty.
Therefore we will consider the case of Carter Holt Harvey which examines the trustee’s right of indemnity.
Dr. Campbell Rankine will lead us through this topic.