Foreign Beneficiaries and Australian Trusts: Their Position Is Still No Clearer

In this article, the author examines the Australian legislation concerning the taxation of capital gains derived by foreign beneficiaries of Australian trusts. He challenges the Commissioner of Taxation’s approach of taxing capital gains derived by an Australian–resident trust from assets located abroad, which have no connection with Australia, and where the gains are distributed to non-resident beneficiaries, as contrary to the intent of the legislation. To resolve the situation, the article advocates further case law to give guidance on the availability of relief from capital gains tax for foreign beneficiaries of Australian trusts.