The Australian Taxation Office has sought leave to appeal to the High Court after a recent decision in relation to the taxation of family trusts went against it, raising the prospect of $1 billion in refunds.

In a landmark victory, the full bench of the Federal Court last month unanimously ruled in favour of Melbourne accountant Steven Bendel, who maintained that certain payments owed by a trust to a corporate beneficiary should not be treated as loans for the purposes of Division 7A of the Tax Act, contrary to the ATO’s long-held view.