I noticed that last week when I was looking at their policy online. Had to do a double take.
I suspect Can and Naylor's recent ruling and their lobbying perhaps?
Obtaining a ruling on a trust deed is one thing. Its a very different thing to vary all the past issues for every trust previously established. And get a private ruling that confirms it worked both before and after. ATO love to ignore those requests until they are already done and are a reality. That's risky. Even then the problem with a HDT is in how:
- Units are redeemed and issued
- Valuation basis for units....
- Disc / Unitholders each have a fixed entitlement to income + capital
Its very easy to breach the "benefits others" issue in the ATO determination on hybrid trusts. For example redemption of units may result in the trust income being on discretionary objects.
Its never been addressed but I have always wondered if the approach to hybrids should be different and how the ATO might approach it. For example, if the settled sum is initially $300 and the units $100. Then this later changes the proportion of discretionary objects v's fixed objects...eg a return of capital $200 to disc beneficiaries through a partial vesting. Then those persons apply for more units so that the discretionary objects are $100 and unit entitlement is $300....All deeds seem to use the units to change this entitlement ....I have never seen an attempt at the inverse through the trust vesting some of the capital settled to beneficiaries who use the $$ to buys units with a fixed entitlement to income.
The rulings I have seen for a HDT literally requires no changes or Part IVA can apply. Yet changes to the trust are what is contemplated.
With my extensive experience in HDTs & HUTs there aren't too many instances when I would ever touch such a trust personally. That doesn't mean all are evil. There are actually some very good instances when hybrids are brilliant.