Thomas Nominees Pty Ltd v Thomas and Ors

(2010) 264 ALR 436; [2010] QSC 417

Supreme Court of Queensland

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Interrogate

Catchwords

1. Trusts
2. › Discretionary trusts
3. › Distribution of income
4. › Streaming of income categories
5. › Franking credits
6. › Whether trust deed authorised differential allocation of franking credits among beneficiaries
7. › Whether dual resolutions effective to distribute franking credits separately from other net income
8. › Trusts Act 1973 (Qld), s 96
1. Taxation
2. › Income tax
3. › Franking credits
4. › Trust distributions
5. › Whether franking credits are income of a trust estate for trust law purposes
6. › Whether franking credits are merely a tax concept or have attributes of income
7. › Income Tax Assessment Act 1997 (Cth), ss 207-20, 207-35
8. › Income Tax Assessment Act 1936 (Cth), ss 95, 97, 99A
1. Equity
2. › Rectification
3. › Rectification of trust resolutions
4. › Whether resolutions should be rectified to reflect trustee's intention
5. › Alternative relief not required where resolutions construed in accordance with intention

Quick Take

Franking credits are a benefit with attributes of income, not merely a tax concept, and constitute an accretion to the trust fund capable of distribution by a trustee. A discretionary trust deed that provides for separate recording and distribution of categories of income (including taxation benefits attaching to franked dividends) authorises the trustee to stream franking credits differentially among beneficiaries through separate resolutions. Dual resolutions — one dealing with franking credits and another with other net income — are effective to distribute franking credits in accordance with the resolution specifically addressing them.