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The ATO's Super Selective Memory - Kelly's Case

Was anybody else left scratching their head after reading the ATO’s recent Decision Impact Statement concerning the Kelly judgement?

We agree the judgement does not impact any existing ATO documents. However, this is largely a consequence of the Commissioner’s view not being tested rather than it being found consistent with established law.

As a refresher, at stake was the Commissioner’s view that a passive investment trust is only allowed a deduction for super paid for directors of its corporate trustee if the directors are common law employees of the trust (not to be mistaken for a corporate entity being an investment vehicle in its own right).

In reaching its decision, the Full Federal Court needed only to consider the threshold question, being whether the directors were ‘entitled’ to the super payment. Although the taxpayer’s argument fell over on technicalities (being the absence of an executed resolution), the court was not otherwise presented with the Commissioner’s full views on the matter, as the ATO’s statement implies.

Until this issue is finally tested and settled, we will not know all the hoops such trusts are required to jump through in order to satisfy the Commissioner’s position. In the meanwhile, it is necessary for advisors to place greater emphasis on planning around this contention.

If you have any questions about our unique approach to superannuation planning and group structuring, contact CABEL, Your Tax Consultant.



CABEL Tax Consulting is a unique service offering preparation and planning for your tax situation. CABEL has been operating this service for over 10 years as a stand-alone division. With assignments relating to tax planning, small business and other capital gains tax concessions and private ruling applications, our services are only limited by your needs.

Kaylene Hubbard, Tax Partner, manages the CABEL Tax Consulting Business Unit with Dean Crossingham, Fiona Oliver and Phil Browne. The team is willing and able to assist with your queries.

Email - Office: 02 807 10 300 A: Level 5, 1 James Place, North Sydney 2060


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