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The Honourable Murray Gleeson AC

Statutory Interpretation

income of the trust estate. Where there is a beneficiary of a trust estate who is not under any legal disability and is presently entitled, s 97 provides that the beneficiary’s share of the income of the trust estate is part of the assessable income of the beneficiary. Later provisions deal with various circumstances in which the trustee will be liable to pay income tax on the income of the trust estate. The application of this part of the Act depends upon an understanding of concepts of trust law. Fiscal consequences are to be worked out by applying the words of the Act to the legal rights and obligations that have emerged from the facts of the case and the conduct of the taxpayer and any other relevant party.1 An accurate analysis of the facts, and the legal rights and obligations upon which the Act is to operate, is an essential first step in applying the law expressed in the statute.

Subject to a qualification to which I will return, income tax legislation takes the factual and legal circumstances of the case as it finds them. In general, people are taxed by reference to the income they have, in fact and in law, derived; and the expenses they have, in fact and in law, incurred. This elementary point is a contextual matter of pervasive importance in the interpretation of the 1936 and 1997 Acts (“the Acts”).

I will return to the significance of context in all legal interpretation, including statutory interpretation. For the present, it is sufficient to note the particular matter of context to which I have referred, that is, that the Acts impose fiscal consequences upon a factual and legal state of affairs which is generally established outside the statute, and is anterior to its operation. For instance the Acts provide for the deduction of losses and outgoings necessarily incurred in


See, for example, Commissioner of Taxation v Linter Textiles Australia Ltd (In Liquidation) [2005] HCA 20, (2005) 220 CLR 592; Raftland Pty Ltd v Federal Commissioner of Taxation [2008] HCA 21; (2008) 82 ALJR 934.

© The Honourable Murray Gleeson AC, Chief Justice of New South Wales 1988-1998, Chief Justice of Australia 1998-2008


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