This week we will read the High Court hearing transcript in Commissioner of Taxation v Bendel and focus on what the Court appears to be probing beyond Div 7A: the nature and source of trust entitlements. If the High Court does examine the nature of trust entitlements then Bendel may be more important than it is already (highly anticipated) to be.
Discussion Focus
- How the High Court is testing whether an unpaid distribution creates a debt at law absent a Saunders v Vautier call, or whether there is merely an equitable right (see especially the exchanges with Gordon, Steward and Edelman JJ ).
- Whether “setting aside” amounts creates a new/separate trust, a sub-trust, or neither, and the consequences for present entitlement and money-had-and-received.
- Reconciling equitable entitlement with legal enforceability in light of Fischer v Nemeske and Chianti and the FFC’s focus on “obligation to repay” for s 109D(3).
- Implications if present entitlement is re-characterised (timing, liabilities, trustee indemnity, and whether income can be “trust property”).
Please see below link to case materials which is assumed reading in order to participate in the discussion:
Commissioner of Taxation v Bendel [2025] FCAFC 15 (19 February 2025)
Bendel and Commissioner of Taxation (Taxation) [2023] AATA 3074 (28 September 2023)
Commissioner of Taxation of the Commonwealth of Australia v Bendel & Anor [2025] HCATrans 68
Optional Reading:
Discussion led by Adrian Cartland