Trust payments were taxable on the beneficiaries as dividend income on a purposive construction of the legislation and realistic view of the facts, and if the tax avoidance arrangements had resulted in a ‘settlement’ for income tax purposes it would have been a settlement made by the beneficiaries’ company as the ‘settlor’. 

Summary

Trust payments were taxable on the beneficiaries as dividend income on a purposive construction of the legislation and realistic view of the facts, and if the tax avoidance arrangements had resulted in a ‘settlement’ for income tax purposes it would have been a settlement made by the beneficiaries’ company as the ‘settlor’. 

Background

The appellants were the sole shareholders and directors of a company (‘WY’). In 2012, WY decided to use a marketed tax avoidance scheme, which was designed