Peter Greensill Family Co Pty Ltd (trustee) v Commissioner of Taxation

In the case of Peter Greensill Family Co Pty Ltd (trustee) v Commissioner of Taxation, the Federal Court was called upon to address an appeal against an assessment of the trustee under s 98 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). The central issue was whether capital gains distributed to a non-resident beneficiary were assessable to the resident trustee, and if they were disregarded under s 855-10(1) of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997). The Peter Greensill Family Trust (PGFT) was established by deed on 21 January 2010, with Peter Greensill Family Co Pty Ltd (PGFC) as its trustee. Alexander Greensill, a beneficiary of the PGFT, is a resident of the United Kingdom. The trust held shares in Greensill Capital Pty Ltd (GCPL), an Australian financial services company, which were subject to various transactions over several years.

The legal issues before the court were whether the capital gains distributed to Alexander Greensill, a non-resident beneficiary, were assessable to PGFC, and whether these gains were disregarded under s 855-10(1) of the ITAA 1997. The court examined the application of Divs 6 and 6E of Pt III of the ITAA 1936 and Subdiv 115-C and Div 855 of the ITAA 1997 to the facts of the case. It was determined that PGFC, as trustee of the PGFT, made a capital gain in each of the years of income ended 30 June 2015, 30 June 2016, and 30 June 2017, due to CGT events concerning the disposal of shares. The court held that s 855-10(1) of the ITAA 1997 did not apply to disregard any of the trust estate's capital gains, as the trust was not a foreign resident or a trustee of a foreign trust, and the amount required to be taxed under s 98 was not a capital gain.

The court concluded that Subdiv 115-C applied in relation to the trust estate's capital gains, as the trust estate had a net capital gain in the relevant income years. Alexander Greensill, as a presently entitled beneficiary, was assessed under s 115-215, which ensured that appropriate amounts of the trust estate's net income attributable to the trust estate's capital gains were treated as a beneficiary's capital gains. The trustee was assessed under s 98 of the ITAA 1936 in accordance with s 115-220 of the ITAA 1997. The court found that s 855-10(1) had no relevant application to the present facts and did not operate to disregard any capital gain in the calculation of the amounts required to be calculated under ss 115-215 and 115-220 in Subdiv 115-C.

The appeal was dismissed, and unless either party applied within 7 days for a different order as to costs, the applicant was to pay the respondent's costs.