The Commissioner of Taxation denied a claimed loss carryforward of a trust which had declared a distribution of all its income for a particular year, as a result of which there was a substantial increase in the amount of the of income to be included in her hands. Over seven years later, she executed a purported disclaimer of her right to that distribution.
After finding that the resolution had not resulted in a current income inclusion to the taxpayer on other grounds, but in going on to find that the disclaimer was invalid, the Court first stated (at para. 141) that “In the present case, the particular legal issue concerns the acceptance of a trust distribution,” and “the question whether a donee is to be taken to have accepted a gift, or an object of a discretionary trust is taken to have accepted a distribution, is broadly similar,” and then stated (at para. 142):
Here, the applicant had handed over all of her financial affairs to [her husband] Mr Lewski. It was within the scope of Mr Lewski’s authority to receive knowledge of the relevant trust distributions. We consider that Mr Lewski was under a duty to inform the applicant of the distributions as they were material transactions that affected her financial position (including her potential liability to tax). There is no question that Mr Lewski was aware of the distributions, as he either made or participated in the making of the relevant resolutions. … Neither the applicant, nor Mr Lewski on her behalf, took any step to disclaim the distribution before 15 December 2015. In these circumstances … we consider the conclusion that the applicant was taken to have had knowledge of, and to have accepted, the gifts before 15 December 2015 to be consistent with the cases and principles discussed above.