Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 (Cth)
This compilation was prepared on 7 October 2010
taking into account amendments up to Act No. 75 of 2010
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General’s Department, Canberra
Contents
This Act may be cited as the
Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 .
This Act commences on the day on which it receives the Royal Assent.
Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Insert:
If there is a change in ownership or control of a trust or an abnormal trading in its units, it:
• may be prevented from deducting its tax losses of earlier income years; and
• may have to work out in a special way its net income and tax loss for the income year; and
• may be prevented from deducting certain amounts in respect of debts incurred in the income year or earlier income years.
This will not be the case if the trust is an excepted trust. However, if it became one by making a family trust election, a special tax may be payable on certain distributions and other amounts.
If a trust is involved in a scheme to take advantage of deductions, it may be prevented from making full use of them.
This Division is about the income tax consequences, for various kinds of fixed trusts, of certain events:
• for an ordinary fixed trust, the event is a change in ownership (subject to a non‑fixed trust exception);
• for an unlisted widely held trust, the event is an abnormal trading in its units, or the end of an income year, together with a change in ownership;
• for a listed widely held trust, the event is an abnormal trading in its units, together with a change in ownership and business;
• for an unlisted very widely held trust or a wholesale widely held trust, the event is an abnormal trading in its units, together with a change in ownership.
An ordinary fixed trust:
• cannot deduct a tax loss from an earlier income year; or
• has to work out its net income and tax loss for the income year in a special way; or
• cannot deduct certain amounts in respect of debts incurred in the income year or an earlier income year;
unless there has been continuity of ownership throughout a particular period or an exception relating to holdings by non‑fixed trusts applies.
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can deduct in the income year a tax loss from a loss year; and
(b) was a fixed trust at all times in the period (the
test period ) from the beginning of the loss year until the end of the income year; and(c) was not a widely held unit trust at all times in the test period; and
(d) was not an excepted trust at all times in the test period.
To find out the meaning of
fixed trust : see section 272‑65.To find out the meaning of
widely held unit trust : see section 272‑105.To find out the meaning of
excepted trust : see section 272‑100.
Condition for deducting tax loss
(2) The trust cannot deduct the tax loss unless it meets either:
• the condition in section 266‑40; or
• the conditions in section 266‑45.
A trust that:
(a) was a fixed trust at all times in the income year (the
test period ); and(b) was not a widely held unit trust at all times in the test period; and
(c) was not an excepted trust at all times in the test period;
must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets either:
• the condition in section 266‑40; or
• the conditions in section 266‑45.
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) was a fixed trust at all times in the period (the
test period ):
(i) if the debt was incurred in an earlier income year—beginning on the day the debt was incurred and ending at the end of the income year; or
(ii) if the debt was incurred in the income year—consisting of the income year; and
(c) was not a widely held unit trust at all times in the test period; and
(d) was not an excepted trust at all times in the test period.
Condition for deducting amount
(2) The trust cannot deduct the amount unless it meets either:
• the condition in section 266‑40; or
• the conditions in section 266‑45.
The fixed trust must pass the 50% stake test for the test period.
To find out whether the trust passes the 50% stake test for the period: see Subdivision 269‑C.
(1) If the condition in section 266‑40 is not met, the trust must satisfy the conditions in this section.
First condition
(2) At all times during the test period:
(a) non‑fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the trust; or
(b) both:
(i) a fixed trust or a company (which trust or company is the
holding entity ) must have held, directly or indirectly, all of the fixed entitlements to income and capital of the trust; and(ii) non‑fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph (2)(a) case—the trust; or
(b) in a paragraph (2)(b) case—the holding entity;
at the beginning of the test period must have held those entitlements to those shares at all times during the test period.
Third condition
(4) At the beginning of the test period:
(a) individuals must not have had more than a 50% stake in the income of the trust; or
(b) individuals must not have had more than a 50% stake in the capital of the trust.
Fourth condition
(5) It must be the case that, for each non‑fixed trust (other than an excepted trust) that, at any time in the test period, held directly or indirectly a fixed entitlement to a share of the income or capital of the trust:
(a) if this section is being applied for the purposes of section 266‑25—section 267‑20 would not have prevented the non‑fixed trust from deducting the tax loss concerned if it, rather than the fixed trust, had incurred the loss; or
(b) if this section is being applied for the purposes of section 266‑30—section 267‑60 does not require the non‑fixed trust to work out its net income and tax loss for the income year under Division 268; or
(c) if this section is being applied for the purposes of section 266‑35—section 267‑25, or section 267‑65, as the case requires, would not have prevented the non‑fixed trust from deducting the amount concerned if it, rather than the fixed trust, would otherwise be entitled to deduct the amount.
(1) If section 266‑25 prevents the fixed trust from deducting a tax loss, it can deduct the part of the tax loss that is attributable to a part of the loss year.
(2) However, the trust can do this only if, assuming that that part of the loss year had been treated as the whole of the loss year for the purposes of sections 266‑40 and 266‑45, the trust would have been entitled to deduct the tax loss.
Notice about non‑resident non‑fixed trust
(1) The Commissioner may give the trustee of a fixed trust a notice in accordance with section 266‑60 if the requirements of subsections (2) to (5) of this section are met.
First requirement
(2) In its return of income for an income year, the fixed trust:
(a) must have deducted a tax loss from an earlier income year; or
(b) must not have worked out its net income and tax loss for the income year under Division 268; or
(c) must have deducted an amount in relation to a debt;
where it would not be allowed to deduct the tax loss or amount in respect of the debt, or would be required to work out its net income and tax loss under that Division, unless it met the conditions in section 266‑45.
Second requirement
(3) In order to determine whether it meets the conditions in section 266‑45, the Commissioner must need information about a non‑fixed trust mentioned in subsection 266‑45(5).
Third requirement
(4) When the Commissioner gives the notice:
(a) a trustee of the non‑fixed trust must be a non‑resident; or
(b) the central management and control of the non‑fixed trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the end of the income year mentioned in subsection (2); and
(b) the end of the period during which the trustee of the fixed trust is required by section 262A to retain records in relation to that income year.
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 266‑55(2) to (5) are met must require the trustee to give the Commissioner specified information that is relevant to determining whether the requirements of subsection 266‑45(5) are satisfied in relation to the non‑fixed trust mentioned in subsections 266‑55(3) and (4).
Trustee knowledge
(2) The information need not be within the knowledge of the trustee at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the trustee is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the trustee does not give the information within the period or within such further period as the Commissioner allows, the fixed trust is taken not to meet, and never to have met, the conditions in section 266‑45.
Application of Division 268
(5) If, because of subsection (4), the fixed trust is required to work out under Division 268 its net income and tax loss for the income year mentioned in subsection 266‑55(2), that Division is to be applied as if Subdivision 268‑B required the income year to be divided into such periods as would result in the highest possible net income for the income year.
No offences or penalties
(6) To avoid doubt, subsections (4) and (5) do not cause the trustee of the fixed trust to commit any offence or be liable to any penalty under Part VII for deducting the amount concerned, or for not working out the trust’s net income and tax loss under Division 268, in its return.
An unlisted widely held trust:
• cannot deduct a tax loss from an earlier income year; or
• has to work out its net income and tax loss for the income year in a special way; or
• cannot deduct certain amounts in respect of debts;
unless its ownership has been the same after any abnormal trading in its units and at the end of income years, during a certain period.
Type of trust to which this section applies—case 1
(1) This section applies to a trust that:
(a) can in the income year deduct a tax loss from a loss year; and
(b) was an unlisted widely held trust at all times in the period (the
test period ) from the beginning of the loss year until the end of the income year; and(c) was not a wholesale widely held trust at all times in the test period; and
(d) was not an unlisted very widely held trust at all times in the test period; and
(e) was not an excepted trust at all times in the test period.
To find out the meaning of
unlisted widely held trust : see section 272‑110.To find out the meaning of
wholesale widely held trust : see section 272‑125.To find out the meaning of
unlisted very widely held trust : see section 272‑120.To find out the meaning of
excepted trust : see section 272‑100.
Type of trust to which this section applies—case 2
(2) This section also applies to a trust that:
(a) can in the income year deduct a tax loss from a loss year; and
(b) was an unlisted widely held trust, other than an unlisted very widely held trust or a wholesale widely held trust, at some time in the period (the
test period ) from the beginning of the loss year until the end of the income year; and(c) was a listed widely held trust at all other times in the test period; and
(d) was not an excepted trust at all times in the test period.
To find out the meaning of
listed widely held trust : see section 272‑115.
Condition for deducting tax loss
(3) The trust cannot deduct the tax loss unless it meets the condition in section 266‑90.
Type of trust to which this section applies—case 1
(1) A trust that:
(a) was an unlisted widely held trust at all times in the income year (the
test period ); and(b) was not a wholesale widely held trust at all times in the test period; and
(c) was not an unlisted very widely held trust at all times in the test period; and
(d) was not an excepted trust at all times in the test period;
must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets the condition in section 266‑90.
Type of trust to which this section applies—case 2
(2) A trust that:
(a) was an unlisted widely held trust, other than an unlisted very widely held trust or a wholesale widely held trust, at some time in the income year (the
test period ); and(b) was a listed widely held trust at all other times in the test period; and
(c) was not an excepted trust at all times in the test period;
must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets the condition in section 266‑90.
Type of trust to which this section applies—case 1
(1) This section applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) was an unlisted widely held trust at all times in the period (the
test period ):
(i) if the debt was incurred in an earlier income year—beginning on the day the debt was incurred and ending at the end of the income year; or
(ii) if the debt was incurred in the income year—consisting of the income year; and
(c) was not a wholesale widely held trust at all times in the test period; and
(d) was not an unlisted very widely held unit trust at all times in the test period; and
(e) was not an excepted trust at all times in the test period.
Type of trust to which this section applies—case 2
(2) This section also applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) was an unlisted widely held trust, other than an unlisted very widely held trust or a wholesale widely held trust, at some time in the period (the
test period ):
(i) if the debt was incurred in an earlier income year—beginning on the day the debt was incurred and ending at the end of the income year; or
(ii) if the debt was incurred in the income year—consisting of the income year; and
(c) was a listed widely held trust at all other times in the test period; and
(d) was not an excepted trust at all times in the test period.
Condition for deducting amount
(3) The trust cannot deduct the amount unless it meets the condition in section 266‑90.
(1) If this section is being applied for the purposes of section 266‑75 or 266‑85, on each occasion when either of the following events occurs:
(a) an abnormal trading in the trust’s units occurs during the test period;
(b) an income year of the trust ends during the test period (including at the end of the test period);
the trust must pass the 50% stake test in respect of the following times:
(c) the beginning of the test period;
(d) immediately after the event occurs.
To find out whether the trust passes the 50% stake test: see Subdivision 269‑C.
(2) If this section is being applied for the purposes of section 266‑80, on each occasion when an abnormal trading in the trust’s units occurs during the test period, the trust must pass the 50% stake test in respect of the following times:
(a) the beginning of the test period; and
(b) immediately after the abnormal trading occurs.
(1) If section 266‑75 prevents the trust from deducting a tax loss, it can deduct the part of the tax loss that is attributable to a part of the loss year.
(2) However, the trust can do this only if, assuming that that part of the loss year had been treated as the whole of the loss year for the purposes of section 266‑90, the trust would have been entitled to deduct the tax loss.
A listed widely held trust:
• cannot deduct a tax loss from an earlier income year; or
• has to work out its net income and tax loss for the income year in a special way; or
• cannot deduct certain amounts in respect of debts incurred in the same year or earlier income years;
unless either:
• there was no abnormal trading; or
• there was abnormal trading, but the trust’s ownership and business did not change.
Also, it may still be prevented from deducting the tax loss to the extent that it is attributable to certain debt deductions.
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can in the income year deduct a tax loss from a loss year; and
(b) was a listed widely held trust at all times in the period (the
test period ) from the beginning of the loss year until the end of the income year; and(c) was not an excepted trust at all times in the test period.
To find out the meaning of
listed widely held trust : see section 272‑115.To find out the meaning of
excepted trust : see section 272‑100.
Condition for deducting tax loss
(2) The trust cannot deduct the tax loss unless it meets either:
• the condition in subsection 266‑125(1); or
• the condition in subsection 266‑125(2).
Additional restriction on deducting tax loss
(3) Even if it meets either of the conditions, it still cannot deduct the tax loss, or part of the tax loss, if section 266‑135 (which deals with certain debt deductions) prevents it from doing so.
A trust that:
(a) was a listed widely held trust at all times in the income year (the
test period ); and(b) was not an excepted trust at all times in the test period;
must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets either:
• the condition in subsection 266‑125(1); or
• the condition in subsection 266‑125(2).
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) was a listed widely held trust at all times in the period (the
test period ):
(i) if the debt was incurred in an earlier income year—beginning on the day the debt was incurred and ending at the end of the income year; or
(ii) if the debt was incurred in the income year—consisting of the income year; and
(c) was not an excepted trust at all times in the test period.
Condition for deducting amount
(2) The trust cannot deduct the amount unless it meets either:
• the condition in subsection 266‑125(1); or
• the condition in subsection 266‑125(2).
(1) There must be no abnormal trading in the trust’s units during the test period.
To find out the meaning of
abnormal trading : see Subdivision 269‑B.(2) If there is abnormal trading on one or more occasions, then either:
(a) for each abnormal trading, the trust must pass the 50% stake test in respect of the following times:
(i) the beginning of the test period;
(ii) immediately after the abnormal trading; or
(b) if it does not, at all times after the first or only abnormal trading in respect of which the requirement in paragraph (a) is not satisfied and before the end of the test period, the trust must pass the same business test in relation to the time immediately before that abnormal trading.
To find out whether the trust passes the 50% stake test: see Subdivision 269‑C.
To find out whether the trust passes the same business test: see Subdivision 269‑F.
(1) If section 266‑110 prevents the trust from deducting a tax loss, it can deduct the part of the tax loss that is attributable to a part of the loss year.
(2) However, the trust can do this only if, assuming that that part of the loss year had been treated as the whole of the loss year for the purposes of section 266‑125, the trust would have been entitled to deduct the tax loss.
(3) Also, the trust cannot deduct the part of the tax loss, or some of it, if section 266‑135 (which deals with certain debt deductions) prevents it from doing so.
Section applies after sections 266‑110 and 266‑130
(1) This section applies if, after applying sections 266‑110 and 266‑130, a trust can deduct in the income year the whole or part (the
otherwise‑deductible loss ) of a tax loss from a loss year.
Trust must satisfy condition if debt deduction etc.
(2) If:
(a) there would have been no otherwise‑deductible loss, or its amount would have been smaller, if the trust had not (after applying section 266‑120) been able to deduct in the loss year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) the trust could only deduct the amount in respect of the debt because it passed the same business test as mentioned in paragraph 266‑125(2)(b); and
(c) the Commissioner considers that the trust passed the same business test as mentioned in that paragraph for the purpose, or for purposes including the purpose, of being able to deduct the amount because of that paragraph;
the trust cannot deduct the otherwise‑deductible loss, or can only deduct the smaller amount mentioned in paragraph (a) of this section, unless it meets the condition in subsection (3).
Condition
(3) The condition is that, at all times after the abnormal trading mentioned in paragraph 266‑125(2)(b) and before the end of the income year, the trust must pass the same business test in relation to the time immediately before the abnormal trading.
An unlisted very widely held trust or a wholesale widely held trust:
• cannot deduct a tax loss from an earlier income year; or
• has to work out its net income and tax loss for the income year in a special way; or
• cannot deduct certain amounts in respect of debts incurred in the income year or earlier income years;
unless either:
• there was no abnormal trading; or
• there was abnormal trading, but the trust’s ownership did not change.
(1) If a trust is covered by subsection (2), it cannot deduct in the income year a tax loss from a loss year unless it meets either:
• the condition in subsection 266‑165(1); or
• the condition in subsection 266‑165(2).
(2) A trust is covered by this subsection if:
(a) in the period (the
test period ) from the later of:
(i) the beginning of the loss year; and
(ii) the end of any start‑up period (within the meaning of subsection 272‑120(3));
until the end of the income year, the trust:
(iii) was at all times an unlisted very widely held trust; or
(iv) was at all times a wholesale widely held trust; or
(v) was at some time an unlisted very widely held trust and, at any time when it was not, was a wholesale widely held trust or a listed widely held trust; or
(vi) was at some time a wholesale widely held trust and, at any time when it was not, was an unlisted very widely held trust or a listed widely held trust; and
(b) in the test period, the trust was not at all times an excepted trust.
To find out the meaning of
unlisted very widely held trust : see section 272‑120.To find out the meaning of
wholesale widely held trust : see section 272‑125.To find out the meaning of
excepted trust : see section 272‑100.To find out the meaning of
listed widely held trust : see section 272‑115.
(1) If a trust is covered by subsection (2), it must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets either:
• the condition in subsection 266‑165(1); or
• the condition in subsection 266‑165(2).
(2) A trust is covered by this subsection if:
(a) in the period (the
test period ) consisting of so much of the income year as occurs after the end of any start‑up period (within the meaning of subsection 272‑120(3)), the trust:
(i) was at all times an unlisted very widely held trust; or
(ii) was at all times a wholesale widely held trust; or
(iii) was at some time an unlisted very widely held trust and, at any time when it was not, was a wholesale widely held trust or a listed widely held trust; or
(iv) was at some time a wholesale widely held trust and, at any time when it was not, was an unlisted very widely held trust or a listed widely held trust; and
(b) in the test period, the trust was not at all times an excepted trust.
(1) If a trust is covered by subsection (2), it cannot deduct in the income year an amount:
(a) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or(b) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt;
unless it meets either:
• the condition in subsection 266‑165(1); or
• the condition in subsection 266‑165(2).
(2) A trust is covered by this subsection if:
(a) in the period (the
test period ) from the later of the end of any start‑up period (within the meaning of subsection 272‑120(3)) and the beginning of:
(i) if the debt was incurred in an earlier income year—the day on which the debt was incurred; or
(ii) if the debt was incurred in the income year—the income year;
until the end of the income year, the trust:
(iii) was at all times an unlisted very widely held trust; or
(iv) was at all times a wholesale widely held trust; or
(v) was at some time an unlisted very widely held trust and, at any time when it was not, was a wholesale widely held trust or a listed widely held trust; or
(vi) was at some time a wholesale widely held trust and, at any time when it was not, was an unlisted very widely held trust or a listed widely held trust; and
(b) in the test period, the trust was not at all times an excepted trust.
(1) There must be no abnormal trading in the units of the trust during the test period.
To find out the meaning of
abnormal trading : see Subdivision 269‑B.(2) If there is abnormal trading on one or more occasions, then for each abnormal trading the trust must pass the 50% stake test in respect of the following times:
(a) the beginning of the test period;
(b) immediately after the abnormal trading.
To find out whether the trust passes the 50% stake test: see Subdivision 269‑C.
(1) If section 266‑150 prevents the trust from deducting a tax loss, it can deduct the part of the tax loss that is attributable to a part of the loss year.
(2) However, the trust can do this only if, assuming that that part of the loss year had been treated as the whole of the loss year for the purposes of section 266‑165, the trust would have been entitled to deduct the tax loss.
If a trust would only avoid the tax consequences of this Division because of interests held by a non‑resident family trust, the Commissioner may require the trust to give certain information about the non‑resident family trust. If it is not given, the trust does not avoid the tax consequences of this Division.
Notice about family trust
(1) The Commissioner may give the trustee of a trust (the
primary trust ) a notice in accordance with section 266‑185 if the requirements of subsections (2) to (5) of this section are met.
First requirement
(2) In its return of income for an income year, the primary trust:
(a) must have deducted a tax loss from an earlier income year; or
(b) must not have worked out its net income and tax loss for the income year under Division 268; or
(c) must have deducted an amount in relation to a debt;
where it would not be allowed to deduct the tax loss or amount in respect of the debt, or would be required to work out its net income and tax loss under that Division, if it did not meet a condition or conditions as mentioned in section 266‑40, 266‑45, 266‑90, 266‑125 or 266‑165 (the
conditions provision ).
Second requirement
(3) The Commissioner must be satisfied that the primary trust would not meet the condition or conditions if one or more trusts were not family trusts.
Third requirement
(4) When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non‑resident; or
(b) the central management and control of the trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the end of the income year to which the return relates; and
(b) the end of the period during which the trustee of the primary trust is required by section 262A to retain records in relation to that income year.
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 266‑180(2) to (5) are met must require the trustee of the primary trust to give the Commissioner specified information about conferrals of present entitlements to, and distributions of, income and capital, since the start of the test period mentioned in the conditions provision, by all of the family trusts meeting the requirements of paragraph 266‑180(4)(a) or (b).
Trustee knowledge
(2) The information need not be within the knowledge of the trustee at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the trustee is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the trustee does not give the information within the period or within such further period as the Commissioner allows, the primary trust is taken not to meet, and never to have met, the condition or conditions in the conditions provision.
(5) If, because of subsection (4), the fixed trust is required to work out under Division 268 its net income and tax loss for the income year mentioned in subsection 266‑180(2), that Division is to be applied as if Subdivision 268‑B required the income year to be divided into such periods as would result in the highest possible net income for the income year.
No offences or penalties
(6) To avoid doubt, subsections (4) and (5) do not cause the trustee of the primary trust to commit any offence or be liable to any penalty under Part VII for deducting the amount concerned, or for not working out the trust’s net income and tax loss under Division 268, in the trust’s return.
This Division is about the income tax consequences for a non‑fixed trust if its ownership or control changes.
A non‑fixed trust cannot deduct:
• a tax loss from a loss year; or
• certain amounts in respect of debts incurred in earlier income years;
unless:
• if applicable, it meets an ownership test based on income and capital distributions; and
• it did not fail that test in a previous year; and
• if applicable, it meets an ownership test based on fixed entitlements to income and capital; and
• its control has stayed the same.
Type of trust to which this Subdivision applies
(1) This section applies to a trust that:
(a) can deduct in the income year a tax loss from a loss year; and
(b) was a non‑fixed trust at any time in the period (the
test period ) from the beginning of the loss year until the end of the income year; and(c) was not an excepted trust at all times in the test period.
To find out the meaning of
non‑fixed trust : see section 272‑70.To find out the meaning of
excepted trust : see section 272‑100.
Conditions for deducting tax loss
(2) The trust cannot deduct the tax loss unless it meets:
• the condition in subsection 267‑30(2) (if applicable); and
• the condition in section 267‑35; and
• the condition in subsection 267‑40(2) (if applicable); and
• the condition in section 267‑45.
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63, or under section 8‑1 or 25‑35 of the
Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt, incurred in an earlier income year, as bad; or(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt incurred in an earlier income year; and
(b) was a non‑fixed trust at any time in the period (the
test period ) beginning on the day the debt was incurred and ending at the end of the income year; and(c) was not an excepted trust at all times in the test period.
Condition for deducting amount
(2) The trust cannot deduct the amount unless it meets:
• the condition in subsection 267‑30(2) (if applicable); and
• the condition in section 267‑35; and
• the condition in subsection 267‑40(2) (if applicable); and
• the condition in section 267‑45.
When trust must meet the condition
(1) If either or both of the following happened, the trust must meet the condition in subsection (2):
(a) the trust distributed income:
(i) in the income year or within 2 months after its end; and
(ii) in at least one of the 6 earlier income years; or
(b) the trust distributed capital:
(i) in the income year or within 2 months after its end; and
(ii) in at least one of the 6 earlier income years.
The condition
(2) The condition is that the trust must pass the pattern of distributions test for the income year.
To find out whether the trust passes the pattern of distributions test for the income year: see Subdivision 269‑D.
The trust must not have been prevented from deducting the tax loss in an earlier income year because of a failure to meet the condition in subsection 267‑30(2) or conditions that included that condition.
When trust must meet condition
(1) If at any time (the
test time ) in the test period, individuals (thethreshold group ) have more than a 50% stake in the income or capital of the trust, the trust must meet the condition in subsection (2).To find out whether individuals have more than a 50% stake in the income or capital of the trust: see Subdivision 269‑C.
Condition
(2) The condition is that, during the period beginning at the test time and finishing at the end of the test period, the same individuals (who must be some or all of the threshold group) must have had more than a 50% stake in the income or the capital, respectively, of the trust.
Commissioner discretion
(3) If:
(a) after the test time, some or all of the threshold group cease to have a 50% stake in the income or capital of the trust at a particular time; and
(b) having regard to the likely manner of exercise of any discretion of the trustee to distribute income or capital of the trust after the particular time and to any other relevant matter, the Commissioner considers it fair and reasonable that the individuals should be taken to have the stake at the particular time and at all later times in the test period;
the individuals are taken to have that stake at the particular time and at all later times in the test period.
A group must not, during the test period, begin to control the trust directly or indirectly.
To find out what it means for a group to control the trust: see Subdivision 269‑E.
(1) If section 267‑20 prevents a trust from deducting a tax loss because the trust does not meet the condition in section 267‑40 or 267‑45 or both conditions, it can deduct the part of the tax loss that is attributable to a part of the loss year.
(2) However, the trust can do this only if, assuming that that part of the loss year had been treated as the whole of the loss year for the purposes of sections 267‑40 and 267‑45, the trust would have been entitled to deduct the tax loss.
A non‑fixed trust:
• must work out its net income and tax loss for the income year in a special way; or
• cannot deduct certain amounts in respect of debts incurred in the income year;
unless:
• if applicable, it meets an ownership test relating to fixed entitlements to shares of income and capital; and
• its control has stayed the same.
Type of trust to which this Subdivision applies A trust that:
(a) was a non‑fixed trust at any time in the income year (the
test period ); and(b) was not an excepted trust at all times in the test period;
must work out its net income and tax loss for the income year under Division 268 (How to work out a trust’s net income and tax loss for the income year), unless it meets:
• the condition in subsection 267‑70(2) (if applicable); and
• the condition in section 267‑75.
To find out the meaning of
excepted trust : see section 272‑100.
Type of trust to which this section applies
(1) This section applies to a trust that:
(a) can deduct in the income year (the
test period ) an amount:
(i) under section 51 or 63 in respect of the writing off of the whole or part of a debt, incurred in the income year, as bad; or
(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt incurred in the income year; and
(b) was a non‑fixed trust at any time in the test period; and
(c) was not an excepted trust at all times in the test period.
Condition for deducting amount
(2) The trust cannot deduct the amount unless it meets
• the condition in subsection 267‑70(2) (if applicable); and
• the condition in section 267‑75.
When trust must meet condition
(1) If at any time (the
test time ) in the test period, individuals (thethreshold group ) have more than a 50% stake in the income or capital of the trust, the trust must meet the condition in subsection (2).To find out whether individuals have more than a 50% stake in the income or capital of the trust: see Subdivision 268‑C.
Condition
(2) The condition is that, during the period beginning at the test time and finishing at the end of the test period, the same individuals (who must be some or all of the threshold group) must have more than a 50% stake in the income or the capital, respectively, of the trust.
Commissioner discretion
(3) If:
(a) after the test time, some or all of the threshold group cease to have a 50% stake in the income or capital of the trust at a particular time; and
(b) having regard to the likely manner of exercise of any discretion of the trustee to distribute income or capital of the trust after the particular time and to any other relevant matter, the Commissioner considers it fair and reasonable that the individuals should be taken to have the stake at the particular time and at all later times in the test period;
the individuals are taken to have that stake at the particular time and at all later times in the test period.
A group must not, during the test period, begin to control the trust directly or indirectly.
To find out what it means for a group to control the trust: see Subdivision 269‑E.
If a trust would only avoid the tax consequences of this Division because of interests held by a non‑resident family trust, the Commissioner may require the trust to give certain information about the non‑resident family trust. If it is not given, the trust does not avoid the tax consequences of this Division.
Notice about family trust
(1) The Commissioner may give the trustee of a trust (the
primary trust ) a notice in accordance with section 267‑90 if the requirements of subsections (2) to (5) of this section are met.
First requirement
(2) In its return of income for an income year, the primary trust:
(a) must have deducted a tax loss from an earlier income year; or
(b) must not have worked out its net income and tax loss for the income year under Division 268; or
(c) must have deducted an amount in relation to a debt;
where it would not be allowed to deduct the tax loss or amount in respect of the debt, or would be required to work out its net income and loss under that Division, if it did not meet a condition or conditions as mentioned in section 267‑40 or 267‑70 (the
conditions provision ).
Second requirement
(3) The Commissioner must be satisfied that the primary trust would not meet the condition or conditions if one or more trusts were not family trusts.
Third requirement
(4) When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non‑resident; or
(b) the central management and control of the trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the end of the income year to which the return relates; and
(b) the end of the period during which the trustee of the primary trust is required by section 262A to retain records in relation to that income year.
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 267‑85(2) to (5) are met must require the trustee to give the Commissioner specified information about conferrals of present entitlements to, and distributions of, income and capital, since the start of the test period mentioned in the conditions provision, by all of the family trusts meeting the requirements of paragraph 267‑85(4)(a) or (b).
Trustee knowledge
(2) The information need not be within the knowledge of the trustee at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the trustee is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the trustee does not give the information within the period or within such further period as the Commissioner allows, the primary trust is taken not to meet, and never to have met, the condition or conditions in the conditions provision.
Application of Division 268
(5) If, because of subsection (4), the fixed trust is required to work out under Division 268 its net income and tax loss for the income year mentioned in subsection 267‑85(2), that Division is to be applied as if Subdivision 268‑B required the income year to be divided into such periods as would result in the highest possible net income for the income year.
No offences or penalties
(6) To avoid doubt, subsections (4) and (5) do not cause the trustee of the primary trust to commit any offence or be liable to any penalty under Part VII for deducting the amount concerned, or for not working out the trust’s net income and tax loss under Division 268, in the trust’s return.
This Division requires a trust’s net income and tax loss to be worked out in a special way. The income year is divided into periods as the basis for the calculation.
(1) If:
(a) a trust’s net income and tax loss for the income year are required by section 266‑30 to be worked out under this Division; and
(b) the trust did not meet the requirements of subsections 266‑45(2) and (4);
the income year is divided into periods as follows.
(2) The first period starts at the start of the income year. Each later period starts immediately after the end of the previous period.
(3) The last period ends at the end of the income year. Each period (except the last) ends at the latest time that would result in the trust passing the 50% stake test for the whole of the period.
(1) If:
(a) a trust’s net income and tax loss for the income year are required by section 266‑30 to be worked out under this Division; and
(b) the trust met the requirements of subsections 266‑45(2) and (4);
the income year is divided into periods as follows.
(2) The first period starts at the start of the income year. Each later period starts immediately after the end of the previous period.
(3) The last period ends at the end of the income year. Each period (except the last) ends at the earliest of:
(a) the latest time that would result in the persons holding fixed entitlements to shares of the income or shares of the capital of:
(i) if the trust met the requirements of paragraph 266‑45(2)(a)—the trust; or
(ii) if the trust met the requirements of paragraph 266‑45(2)(b)—the holding entity mentioned in that paragraph;
and the percentages of the shares that they hold, remaining the same during the whole of the period; and
(b) the times that, for all of the non‑fixed trusts (other than excepted trusts) holding directly or indirectly a fixed entitlement to a share of the income or capital of the trust at any time during the income year, are the latest times that would result in individuals having more than a 50% stake in their income or capital; and
(c) the earliest time in the period when a group begins to control a non‑fixed trust (other than an excepted trust) that holds directly or indirectly a fixed entitlement to a share of the income or capital of the trust at any time during the income year.
To find out when a group begins to control a trust: see Subdivision 269‑E.
(1) If a trust’s net income and tax loss for the income year are required by section 266‑80, 266‑115 or 266‑155 to be worked out under this Division, the income year is divided into periods as follows.
(2) The first period starts at the start of the income year. Each later period starts immediately after the end of the previous period.
(3) The last period ends at the end of the income year. Each period (except the last) ends at the earliest time at which there is an abnormal trading in the trust’s units, where the trust does not pass the 50% stake test in respect of the following times:
(a) the beginning of the period;
(b) immediately after the abnormal trading.
(4) However, if the trust is a listed widely held trust, what would otherwise be 2 or more successive periods are treated as a single period if during all of them the trust passed the same business test in relation to the time immediately before the end of the first of the successive periods.
(1) If a trust’s net income and tax loss for the income year are required by section 267‑60 to be worked out under this Division, the income year is divided into periods as follows.
(2) The first period starts at the start of the income year. Each later period starts immediately after the end of the previous period.
(3) The last period ends at the end of the income year.
(4) If the condition in subsection 267‑70(2) applies but the trust does not meet the condition, each period (except the last) ends at the earlier of:
(a) the latest time, after the test time mentioned in that section, that would result in the same individuals having more than a 50% stake in the income or the capital, as the case requires, of the trust during the whole of the period; or
(b) the earliest time when a group begins to control the trust directly or indirectly.
(5) If the condition in subsection 267‑70(2) does not apply, or does apply and the trust meets the condition, each period (except the last) ends at the earliest time when a group begins to control the trust directly or indirectly.
(1) A notional loss or notional net income of the trust must be worked out for each period into which the income year has been divided in accordance with Subdivision 268‑B.
(2) The trust has a notional loss for a period if the deductions attributed to the period under section 268‑35 exceed the assessable income attributed to the period under section 268‑40. The
notional loss is the amount of the excess.For a period during which the trust was in partnership, the notional loss is worked out under Subdivision 268‑D.
(3) On the other hand, if that assessable income exceeds those deductions, the trust has a
notional net income for the period, equal to the excess.For a period during which the trust was in partnership, the notional net income is worked out under Subdivision 268‑D.
(4) If the trust has a notional loss for
none of the periods in the income year, this Subdivision has no further application, and the trust’s net income for the income year is calculated in the usual way.The usual way of working out net income is set out in section 95.
(1) The trust’s deductions for the income year are attributed to periods in the income year as follows.
(2) The following deductions are attributed to each period in proportion to the length of the period:
(a) deductions for depreciation;
See section 54, and Division 42 of the
Income Tax Assessment Act 1997 .(b) deductions for exploration or prospecting expenditure, or allowable capital expenditure, in connection with mining or quarrying, if the trust has elected that the deductions not be limited by the available assessable income;
See Divisions 10, 10AAA and 10AB of Part III, and Division 330 of the
Income Tax Assessment Act 1997. (c) deductions for expenditure, deductions for which are spread over 2 or more years, but not:
(i) deductions for exploration or prospecting expenditure, or capital expenditure, in connection with mining or quarrying; or
See Divisions 10, 10AAA and 10AB of Part III, and Division 330 of the
Income Tax Assessment Act 1997 .
(ii) full year deductions (see subsection (5));
(d) deductions for expenditure of capital monies in connection with an Australian film.
See section 124ZAFA.
(3) All other deductions (except full year deductions) are attributed to periods as if each period were an income year.
(4) Full year deductions are not attributed to any of the periods. They are brought in at a later stage of the process of calculating the trust’s net income for the income year.
(5) These are
full year deductions :
(a) deductions for bad debts under section 51 (Losses and outgoings), or under section 8‑1 (about general deductions) of the
Income Tax Assessment Act 1997 ;(b) deductions for bad debts under section 63 (Bad debts), or under section 25‑35 (about bad debts) of the
Income Tax Assessment Act 1997 , or for losses on debt/equity swaps under section 63E;(c) deductions, so far as they are allowable under section 51, or under Division 8 (which is about deductions) of the
Income Tax Assessment Act 1997 , because Subdivision H (Period of deductibility of certain advance expenditure) of Division 3 of Part III applies to the trust in relation to the income year;(d) deductions allowable under section 78 (Gifts, pensions etc.) or 78B (Promoters recoupment tax) or under Division 30 of the
Income Tax Assessment Act 1997 ;(e) deductions for payments of pensions, gratuities or retiring allowances under section 25‑50 of the
Income Tax Assessment Act 1997 ;(f) deductions for tax losses of earlier income years;
See sections 79E, 79F, 80, 80AAA and 80AA, and Division 36 of the
Income Tax Assessment Act 1997 .(g) deductions for allowable capital expenditure in connection with mining or quarrying, except so far as the trustee has elected that the deductions not be limited by the available assessable income;
See Divisions 10, 10AAA and 10AB of Part III, and Division 330 of the
Income Tax Assessment Act 1997 .(h) deductions for exploration or prospecting expenditure in connection with mining or quarrying, except so far as the trustee has elected that the deductions not be limited by the available assessable income;
See Divisions 10, 10AAA and 10AB of Part III, and Division 330 of the
Income Tax Assessment Act 1997 (i) deductions for Income Equalization Deposits.
See Division 16C of Part III.
(6) However, a deduction for the balance of capital expenditure is
not a full year deduction if the deduction results from the disposal, loss, lapse, termination of use or destruction of the property.See section 59, and subsection 330‑485(2) of the
Income Tax Assessment Act 1997 .
(1) The trust’s assessable income for the income year is attributed to periods in the income year as follows.
(2) The following amounts are attributed to periods so far as they are reasonably attributable to those periods:
(a) amounts included in the trust’s assessable income under section 97 (Beneficiary of a trust estate not under a legal disability); or
(b) amounts included in the trust’s assessable income under section 98A (Non‑resident beneficiaries assessable in respect of certain income).
(3) The following items of assessable income are attributed to each period in proportion to the length of the period:
(a) insurance recoveries for loss of livestock or trees;
See section 26B, and section 385‑130 of the
Income Tax Assessment Act 1997 .(b) amounts included in assessable income as a result of elections relating to the forced disposal of livestock;
See sections 36, 36AAA and 36AA, and Subdivision 385‑E and section 385‑160 of the
Income Tax Assessment Act 1997 .(c) recoupment of mains electricity connection expenditure.
See section 70A, and item 1.16 in section 20‑30, which lists deductions for which recoupments are assessable under Subdivision 20‑A, of the
Income Tax Assessment Act 1997 .(4) An amount included in the trust’s assessable income under section 26BA (Double wool clips), or under section 385‑185 (Election to defer including profit on second wool clip) of the
Income Tax Assessment Act 1997 , is attributed to the period when the wool would ordinarily have been shorn.(5) An amount included in the trust’s assessable income that is a dividend under:
(a) section 65 (Payments to associated persons); or
(b) section 108 (Loans to shareholders and associates); or
(c) section 109 (Excessive payments to shareholders and associates);
is attributed to the period when the amount was paid or credited, whichever occurred first.
(6) All other items of assessable income (except full year amounts) are attributed to periods as if each period were an income year.
(7)
Full year amounts are amounts referred to in paragraphs (2)(a) and (b), so far as they are not reasonably attributable to a period. They are brought in at a later stage of the process of calculating the trust’s net income for the income year.
(1) The trust’s
net income for the income year is worked out as follows.(2) Add up the notional net incomes (if any) worked out under section 268‑30 or 268‑70.
Note: A notional
loss for a period isnot taken into account, but counts towards the trust’s tax loss for the income year.
(3) Add the full year amounts referred to in subsection 268‑40(7) (if any).
(4) Subtract the trust’s full‑year deductions of these kinds:
(a) deductions for bad debts under section 51 (Losses and outgoings), or under section 8‑1 (about general deductions) of the
Income Tax Assessment Act 1997 ;(b) deductions for bad debts under section 63 (Bad debts), or under section 25‑35 (about bad debts) of the
Income Tax Assessment Act 1997 ;(c) deductions, so far as they are allowable under section 51, or under Division 8 (which is about deductions) of the
Income Tax Assessment Act 1997 , because Subdivision H (Period of deductibility of certain advance expenditure) of Division 3 of Part III applies to the trust in relation to the income year;unless they exceed the total of the notional net incomes and the full year amounts. (If they equal or exceed that total, the trust does not have a net income for the income year.)
(5) If an amount remains, subtract from it the trust’s other full year deductions, in the order shown in subsection 268‑35(5), unless they exceed the amount remaining. (If they equal or exceed that amount, the trust does not have a net income for the income year.)
(6) The amount (if any) remaining is the trust’s
net income for the income year.
(1) For the purposes of section 79E (General domestic losses of post‑1989 years of income), instead of working out the trust’s loss for the year under subsection (1) of that section, it is worked out as follows.
(2) Total the notional losses worked out under section 268‑30 or 268‑70.
(3) Add to the total in subsection (2) the amount (if any) by which the trust’s full year deductions of these kinds:
(a) deductions for bad debts under section 51 (Losses and outgoings);
(b) deductions for bad debts under section 63 (Bad debts);
(c) deductions, so far as they are allowable under section 51 of this Act because Subdivision H (Period of deductibility of certain advance expenditure) of Division 3 of Part III applies to the trust in relation to the income year;
exceed the total of:
(d) the notional net incomes (if any); and
To work out the notional net income: see sections 268‑30 and 268‑70.
(e) the full year amounts referred to in section 268‑40 (if any).
(4) If the trust derived exempt income, subtract its net exempt income as defined in subsection 79E(12).
(5) Any amount remaining is the trust’s loss for the income year.
To find out
how much of the loss can be deducted in later income years, see Division 266 or 267.To find out
how to deduct it, see section 79E.
(1) For the purposes of section 79F (Film losses of post‑1989 years of income), instead of working out the trust’s film loss for the year under subsection (1) of that section, it is worked out as follows.
(2) Apply subsections 268‑50(2) and (3), making the following changes:
(a) take into account assessable film income (as defined in subsection 79F(12)), but not any other assessable income;
(b) take into account film deductions (as defined in subsection 79F(12)), but not any other allowable deductions.
(3) If the trust derived exempt film income (as defined in subsection 79E(12)), subtract from the amount worked out under subsection (2) of this section the trust’s net exempt film income (as defined in subsection 79E(12)).
(4) Apply section 268‑50.
(5) The trust’s film loss for the income year is the amount worked out under subsection (3), to the extent that it is not greater than the amount worked out under subsection (4).
(1) For the purposes of Division 36 (Tax losses of earlier income years) of the
Income Tax Assessment Act 1997 , instead of working out the trust’s tax loss for the year under section 36‑10 of that Act, it is worked out as follows.(2) Total the notional losses.
(3) Add the amount (if any) by which the trust’s full year deductions of these kinds:
(a) deductions for bad debts under section 8‑1 (about general deductions) of the
Income Tax Assessment Act 1997 ;(b) deductions for bad debts under section 25‑35 ( about bad debts) of the
Income Tax Assessment Act 1997 ;(c) deductions, so far as they are allowable under Division 8 (which is about deductions) of the
Income Tax Assessment Act 1997 because Subdivision H (Period of deductibility of certain advance expenditure) of Division 3 of Part III applies to the trust in relation to the income year;exceed the total of:
(d) the notional net incomes (if any); and
To work out the notional net income: see sections 268‑30 and 268‑70.
(e) the full year amounts referred to in section 268‑40 (if any).
(4) If the trust derived exempt income, subtract its net exempt income as defined in section 36‑20 of the
Income Tax Assessment Act 1997 .(5) Any amount remaining is the trust’s tax loss for the income year.
To find out
how much of the tax loss can be deducted in later income years, see Division 266 or 267.To find out
how to deduct it, see section 36‑15 of theIncome Tax Assessment Act 1997 .
(1) For the purposes of Subdivision 375‑G (Film losses) of the
Income Tax Assessment Act 1997 , instead of working out the film component of a tax loss of the trust for the income year under section 375‑805 of that Act, it is worked out as follows.(2) Apply subsections 268‑60(2) and (3), making the following changes:
(a) take into account assessable film income (as defined in subsection 375‑805(3) of the
Income Tax Assessment Act 1997 ), but not any other assessable income;(b) take into account film deductions (as defined in subsection 375‑805(2) of that Act), but not any other allowable deductions.
(3) If the trust derived exempt film income (as defined in subsection 375‑805(5) of that Act), subtract from the amount worked out under subsection (2) of this section the trust’s net exempt film income (as defined in subsection 375‑805(4) of that Act).
(4) Apply section 268‑60.
(5) The film component of the tax loss of the trust for the income year is the amount worked out under subsection (3), to the extent that it is not greater than the amount worked out under subsection (4).
(1) This section applies if at any time during a period the trust was a partner in one or more partnerships.
(2) The trust has a notional loss for the period if the total (the
loss total ) of:
(a) the deductions attributed to the period under section 268‑35; and
(b) the trust’s share of each notional loss (if any) of a partnership for the period;
exceeds the total (the
income total ) of:
(c) the assessable income attributed to the period under section 268‑40; and
(d) the trust’s share of each notional net income (if any) of a partnership for the period.
The
notional loss is the amount of the excess.Note: A notional loss is taken into account in working out the trust’s tax loss under section 268‑50 or 268‑60.
(3) On the other hand, if the income total exceeds the loss total, the trust has a
notional net income for the period, equal to the excess.Note: A notional net income is taken into account in working out the trust’s net income under section 268‑45.
(4) If the trust has a notional net income for
all periods in the income year, this Subdivision has no further application, and the trust’s net income for the income year is worked out in the usual way.The usual way of working out net income is set out in section 95.
(1) This section applies if at any time during a period the trust is a partner in a partnership that has an income year that starts and ends when the trust’s income year starts and ends.
(2) The partnership’s notional loss or notional net income for the period is worked out in the same way as the notional loss or notional net income of a trust.
(3) The trust’s share is calculated by dividing:
(a) the trust’s interest in the partnership’s net income or partnership loss of the income year;
by:
(b) the amount of that net income or partnership loss;
and expressing the result as a percentage.
(4) However, if the partnership had neither a net income nor a partnership loss, the trust’s share is a percentage that is fair and reasonable having regard to the extent of the trust’s interest in the partnership.
(1) This section applies if at any time during a period the trust is a partner in a partnership that has an income year that starts and ends at a different time from when the trust’s income year starts and ends.
(2) So much of the partnership’s net income or partnership loss of an income year as was derived during the period is a notional net income or notional loss of the partnership for the period. (For the purposes of this subsection, the partnership’s net income or partnership loss is calculated without taking account of the partnership’s full year deductions for that income year.)
Note: The partnership’s full year deductions are dealt with in section 268‑85.
(3) The trust’s share is calculated by dividing:
(a) the trust’s interest in the partnership’s net income or partnership loss of the income year;
by:
(b) the amount of that net income or partnership loss;
and expressing the result as a percentage.
(1) This section applies if at any time during the income year the trust is a partner in a partnership that has one or more full year deductions for the income year of the partnership that corresponds to the income year of the trust.
(2) The partnership’s full year deductions are treated as full year deductions of the trust, but only to the extent of the trust’s share.
(3) If the partnership’s income year is the same as the trust’s, the trust’s share is calculated by dividing:
(a) the trust’s interest in the partnership’s net income or partnership loss of the income year;
by:
(b) the amount of that net income or partnership loss;
and expressing the result as a percentage.
(4) However, if the partnership had neither a net income nor a partnership loss, the trust’s share is a percentage that is fair and reasonable having regard to the extent of the trust’s interest in the partnership.
(5) If the partnership’s income year does not start and end at the same time as the trust’s income year, the trust’s share is a percentage that is fair and reasonable having regard to all relevant circumstances.
This Division explains the following concepts or tests that are used in preceding Divisions of this Schedule:
• abnormal trading;
• 50% stake test etc.;
• pattern of distributions test;
• control;
• same business test.
A
trading in units in a unit trust occurs if there is an issue, redemption or transfer of, or other dealing in, the units.
(1) There is an
abnormal trading in units in a unit trust if there is a trading in the units that is abnormal having regard to all relevant factors, including:
(a) the timing of the trading, when compared to the normal timing for trading in its units; and
(b) the number of units traded, when compared to the normal number of units traded; and
(c) any connection between the trading and any other trading in units in the trust; and
(d) any connection between the trading and a tax loss or other deduction of the trust.
(2) There may also be an
abnormal trading under any of the following provisions.
There is an
abnormal trading in units in a unit trust if a trading occurs in its units that the trustee knows or reasonably suspects is part of an acquisition of the trust or merger of the trust with another trust.
There is an
abnormal trading in units in a unit trust (other than a wholesale widely held trust) if 5% or more of the units are traded in one transaction.
(1) There is an
abnormal trading in units in a unit trust (other than a wholesale widely held trust) if the trustee knows or reasonably suspects that a person, or a person and one or more associates of the person, have acquired or redeemed 5% or more of the units in 2 or more transactions and would not have done so if the trust did not have a tax loss or other deduction.(2) For the purposes of other provisions of this Schedule, the abnormal trading occurs at the time of the particular transaction that causes the 5% figure to be exceeded.
(1) There is an
abnormal trading in units in a unit trust (other than a wholesale widely held trust) if more than 20% of the units on issue at the end of any 60 day period were traded during the period.(2) For the purposes of other provisions of this Schedule, the abnormal trading occurs at the end of the 60 day period.
(1) There is an
abnormal trading in units in a wholesale widely held trust during a period if the trustee knows or reasonably suspects that the same persons did not hold more than 50% of its units at the beginning and end of the period.(2) For the purposes of other provisions of this Schedule, the abnormal trading occurs immediately before the end of the period.
For the purposes of section 269‑20, 269‑30 or 269‑40, the trustee must have the knowledge or reasonable suspicion mentioned in that section:
(a) if the section is being applied in determining for the purposes of section 268‑20 whether an abnormal trading occurred—at some time during the income year mentioned in that section; or
(b) if it is being applied in determining for the purposes of any other provision whether an abnormal trading occurred during a period—at some time during the period.
Holding trust and subsidiary trust
(1) If a unit trust has fixed entitlements directly or indirectly to all of the income and capital of another unit trust:
(a) the first trust is a
holding trust of the second; and(b) the second is a
subsidiary trust of the first.
Abnormal trading causing or ending holding‑subsidiary relationship
(2) The transaction that causes a trust to become, or to cease to be, a holding trust of a subsidiary trust (the
bottom subsidiary trust) is anabnormal trading in units in the bottom subsidiary trust unless:
(a) the holding trust is itself a subsidiary trust of one or more holding trusts (each of which is a
higher holding trust ); and(b) immediately before and after the transaction, the bottom subsidiary trust is a subsidiary trust of one or more of the higher holding trusts.
Abnormal trading while holding‑subsidiary relationship exists
(3) While one or more trusts are holding trusts of the same subsidiary trust, there is an
abnormal trading in units in the subsidiary trust if and only if, and at the time at which, there is an abnormal trading in units in the holding trust that is not itself a subsidiary trust of another holding trust.
If the issue of units in a unit trust to existing unit holders does not cause each unit holder’s proportion of the total fixed entitlements to shares of the income and capital of the trust to change, then, except for the purposes of section 269‑20, the issue is disregarded in determining whether there has been an abnormal trading in units in the unit trust.
More than a 50% stake in income
(1) If there are individuals who have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of a trust, those individuals have
more than a 50% stake in the income of the trust.
More than a 50% stake in capital
(2) If there are individuals who have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the trust, those individuals have
more than a 50% stake in the capital of the trust.
(1) If, at all times during a period, or at 2 times:
(a) the same individuals have more than a 50% stake in the income of a trust; and
(b) the same individuals (who may be different from those in paragraph (a)) have more than a 50% stake in the capital of the trust;
the trust
passes the 50% stake test for the period or in respect of the 2 times.
(2) If a trust is a widely held unit trust it is taken to
pass the 50% stake test for a period or in respect of 2 times if it is reasonable to assume that the requirements of paragraphs (1)(a) and (b) are satisfied in respect of the period or the 2 times.
A trust
passes the pattern of distributions test for an income year if, before the end of 2 months after the end of the income year:
(a) the trust distributed directly or indirectly to the same individuals, for their own benefit, a greater than 50% share of all test year distributions of income (see subsection 269‑65(1)); and
(b) the trust distributed directly or indirectly to the same individuals (who may be different from those in paragraph (a)), for their own benefit, a greater than 50% share of all test year distributions of capital (see subsection 269‑65(3)).
Test year distribution of income
(1) A
test year distribution of income is the total of all distributions of income made by the trust in any of the following periods, provided the period does not start more than 6 years before the start of the income year:
(a) the period from the start of the income year until 2 months after its end;
(b) if the trust distributed income before the trigger year (see subsection (2))—the income year, before the trigger year, that is closest to the trigger year;
(c) if paragraph (b) does not apply and the trust distributed income in the trigger year—the trigger year;
(d) if neither paragraph (b) nor paragraph (c) applies—the income year, closest to the trigger year, in which the trust distributed income;
(e) each intervening income year (if any) between the one in paragraph (a) and the one in paragraph (b), (c) or (d).
Trigger year
(2) If this Subdivision is being applied for the purposes of section 267‑20, the
trigger year is the loss year mentioned in that section. If it is being applied for the purposes of section 267‑25, thetrigger year is the year in which the debt mentioned in that section was incurred.
Test year distribution of capital
(3) Subsection (1) applies in the same way to distributions of capital made by the trust, to determine what is a
test year distribution of capital .
For the purposes of section 269‑60, if the trust does not distribute to an individual the same percentage of income or capital for every test year distribution, the trust is taken to have distributed to the individual, for every test year distribution, the smallest percentage that it distributed to the individual for any of the test year distributions.
For the purposes of section 269‑60, if, before the end of 2 months after the end of the income year:
(a) the trust has distributed directly or indirectly the whole or part of a test year distribution of income or test year distribution of capital to a company, partnership or trust (the
entity ); and
Modified application: non‑fixed trust distribution (3) For the purposes of section 267‑25, if the income year mentioned in that section is the 1996‑97 year of income, the condition in subsection 267‑30(2) applies as if there were an additional requirement in section 269‑60 for at least part of one of the test year distributions of income or capital, as the case requires, mentioned in that section to have taken place after 1996 Budget time.
Modified application: non‑fixed trust distribution
(4) For the purpose of section 267‑25, if:
(a) the whole or part of a test year distribution of income or capital of a trust that took place before 1996 Budget time is required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2); and
(b) apart from this subitem, the trust would not meet the condition; and
(c) before the end of:
(i) if subitem (5) applies—the income year; or
(ii) in any other case—2 months after the end of the income year;
mentioned in subsection 267‑30(2), the whole or part of any of the test year distributions of income or capital (whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2), was made, directly or indirectly to an individual, for his or her own benefit; and
(d) the trust would meet the condition in subsection 267‑30(2) if all test year distributions of income or capital (whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2), that were made directly or indirectly, and for his or her own benefit, to any member of the family (within the meaning of section 272‑95) of the individual mentioned in paragraph (c) of this subitem, had instead been made to the individual (in addition to any such distribution actually made to the individual);
the trust meets the condition.
Modified application: non‑fixed trust distribution (5) For the purposes of section 267‑25, if the income year mentioned in that section is the 1996‑97 year of income and it ends on or before 1 October 1997, the following modifications of other provisions apply:
(a) section 267‑30 has effect as if “or within 2 months after its end” were omitted from subparagraphs (1)(a)(i) and (b)(i) of that section; and
(b) sections 269‑60 and 269‑75 have effect as if “2 months after the end of” were omitted (wherever occurring); and
(c) section 269‑65 has effect as if “until 2 months after” were omitted from paragraph (1)(a) of that section.
16
Application of scheme provisions from 1994‑95 year of income Division 270 of the trust loss etc. Schedule applies where the income year mentioned in that Division is the 1994‑95 year of income or any later year of income, but only if:
(a) the assessable income mentioned in subparagraph 270‑10(1)(b)(i) was derived after 1995 Budget time; and
(b) the benefit mentioned in subparagraph 270‑10(1)(b)(ii) was provided after 1995 Budget time.
17
Application of expanded definition of distribution Section 272‑60 of the trust loss etc. Schedule applies to things done after 1 October 1997.
The amendment made by item 2 applies to assessments for the 1996‑97 year of income and all later years of income.
19
Application of foreign loss provision from 1996‑97 year of income (1) Subject to this item, the foreign loss provision applies where the particular year of income mentioned in that provision is the 1996‑97 year of income or any later year of income.
Modified application: test period (2) If, for the purposes of the foreign loss provision, the test period mentioned in any of the earlier year loss provisions would begin on or before 1 October 1997, it is taken for that purpose to begin on 2 October 1997
Modified application: non‑fixed trust distribution (3) If, for the purposes of the foreign loss provision, the income year mentioned in subsection 267‑30(2) is the 1996‑97 year of income, the condition in that subsection applies as if there were an additional requirement in section 269‑60 for at least part of one of the test year distributions of income or capital, as the case requires, mentioned in that section to have taken place after 1 October 1997.
Modified application: non‑fixed trust distribution (4) If, for the purposes of the foreign loss provision:
(a) the whole or part of a test year distribution of income or capital of a trust that took place on or before 1 October 1997 is required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2); and
(b) apart from this subitem, the trust would not meet the condition; and
(c) before the end of:
(i) if subitem (5) applies—the income year; or
(ii) in any other case—2 months after the end of the income year;
mentioned in subsection 267‑30(2), the whole or part of any of the test year distributions of income or capital (whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2), was made directly or indirectly to an individual, for his or her own benefit; and
(d) the trust would meet the condition in subsection 267‑30(2) if all test year distributions of income or capital (whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267‑30(2), that were made directly or indirectly, and for his or her own benefit, to any member of the family (within the meaning of section 272‑95) of the individual mentioned in paragraph (c) of this subitem, had instead been made to the individual (in addition to any such distribution actually made to the individual);
the trust meets the condition.
Modified application: non‑fixed trust distribution (5) For the purposes of the foreign loss provision, if the income year mentioned in that section is the 1996‑97 year of income and it ends on or before 1 October 1997, the following modifications of other provisions apply:
(c) section 267‑30 has effect as if “or within 2 months after its end” were omitted from subparagraphs (1)(a)(i) and (b)(i) of that section; and
(d) sections 269‑60 and 269‑75 have effect as if “2 months after the end of” were omitted (wherever occurring); and
(e) section 269‑65 has effect as if “until 2 months after” were omitted from paragraph (1)(a) of that section.
20
Application of foreign deduction scheme provision from 1996‑97 year of income The foreign deduction scheme provision applies where the particular year of income mentioned in that provision is the 1996‑97 year of income or any later year of income, but only if:
(a) the assessable income mentioned in subparagraph 270‑10(1)(b)(i) was derived after 1 October 1997; and
(b) the benefit mentioned in subparagraph 270‑10(1)(b)(ii) was provided after 1 October 1997.
21
Application of amendments of subsections 170(10) and 170(13) The amendments made by items 10 and 11 apply to assessments made either before or after the commencement of those items.
(1) Subject to this item and item 22A, a family trust election that is proposed to be made cannot specify a year of income under subsection 272‑80(1) of the trust loss etc. Schedule that is before the 1997‑98 year of income.
(2) If:
(a) a family trust election can be made in accordance with subsection 272‑80(2) of the trust loss etc. Schedule specifying the 1998‑99 year of income; and
(b) assuming that the family trust election could instead specify the 1996‑97 year of income or the 1997‑98 year of income (the
qualifying year of income ):
(i) a company that would otherwise be prevented, by section 63B or 63C of the
Income Tax Assessment Act 1936 from deducting in the qualifying year of income an amount in respect of a debt would not be so prevented; or(ii) a company that would otherwise be prevented by subsection 160ZC(5) of the
Income Tax Assessment Act 1936 from applying a net capital loss in the qualifying year of income would not be so prevented; or(iii) a company that would otherwise be prevented by Subdivision 165‑A, 175‑A or 175‑B of the
Income Tax Assessment Act 1997 from deducting an amount in the qualifying year of income would not be so prevented; or(iv) a company that would otherwise be required to calculate its taxable income for the qualifying year of income in accordance with section 50C of the
Income Tax Assessment Act 1936 would not be so required; or(v) a company that would otherwise not be entitled, in calculating its taxable income for the qualifying year of income in accordance with section 50C of the
Income Tax Assessment Act 1936 , to take into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company under section 50D, would be so entitled; or(vi) a company that would otherwise be required to calculate its taxable income and tax loss for the qualifying year of income under Subdivision 165‑B of the
Income Tax Assessment Act 1997 would not be so required; and(c) the trust concerned passes the family control test (see section 272‑87 of the trust loss etc. Schedule):
(i) if the qualifying year of income is the 1996‑97 year of income—at all times from the beginning of that year of income until the end of the 1997‑98 year of income; or
(ii) if the qualifying year of income is the 1997‑98 year of income—at the end of the 1997‑98 year of income; and
(d) the
Taxation Laws Amendment Act (No. 2) 2000 receives the Royal Assent:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—before the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—before the end of 2 months after the end of that year of income;
the election can instead specify the qualifying year of income.
(2A) If:
(a) a family trust election can be made in accordance with subsection 272‑80(2) of the trust loss etc. Schedule in relation to a non‑fixed trust (within the meaning of section 272‑70 of the trust loss etc. Schedule) specifying the 1998‑99 year of income; and
(b) a franked dividend or a franked distribution (both within the meaning of section 177EA of the
Income Tax Assessment Act 1936 ) was included in the assessable income of the trust of the 1997‑98 year of income (thequalifying year of income ); and(c) the trust passes the family control test at the end of the 1997‑98 year of income; and
(d) the
Taxation Laws Amendment Act (No. 2) 1999 and theTaxation Laws Amendment Act (No. 2) 2000 receive the Royal Assent:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—before the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—before the end of 2 months after the end of that year of income;
the election can instead specify the qualifying year of income.
(3) A family trust election specifying the qualifying year of income in accordance with subitem (2) or (2A) must:
(a) be in writing in a form and manner approved by the Commissioner; and
(b) be made:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—by the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.
(4) If a family trust election is made in accordance with subitem (3) specifying the qualifying year of income:
(a) if the trustee is required to furnish a return for the 1998‑99 year of income—such information about the election as is required by the return must be included in the return; and
(b) if the trustee is not required to furnish a return for that year of income—the trustee must, before the end of 2 months after the end of the 1998‑99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the
Gazette , requires.
(5) If:
(a) a family trust election does specify the qualifying year of income in accordance with this item; and
(b) the trust concerned is not prevented by the trust loss etc. Schedule from deducting a tax loss, or an amount in respect of a debt, and is not required to work out its net income and tax loss under Division 268 of that Schedule in:
(i) if the qualifying year is the 1996‑97 year of income—that year of income, the 1997‑98 year of income or both (the
excluded period ); or(ii) if the qualifying year mentioned in that subitem is the 1997‑98 year of income—that year of income (also the
excluded period );no liability to pay family trust distribution tax arises under Division 271 of the trust loss etc. Schedule in respect of a conferral of a present entitlement to, or a distribution of, income or capital that took place in the excluded period.
(6) If the revocation of a family trust election is proposed to specify a time under subsection 272‑80(8) that is before the beginning of the 1998‑99 year of income, then:
(a) subsection 272‑80(7) of the trust loss etc. Schedule does not apply to the revocation; and
(b) if the trustee is required to furnish a return for the 1998‑99 year of income—the revocation must be made in the trust’s return of income for that year of income; and
(c) if the trustee is not required to furnish a return for that year of income—the revocation must:
(i) be in writing in a form approved by the Commissioner; and
(ii) be given to the Commissioner by the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.
(1) If:
(a) a family trust election can be made in accordance with subsection 272‑80(2) of the trust loss etc. Schedule specifying the 1999‑2000 year of income; and
(b) assuming that a family trust election could specify the 1996‑97 year of income, the 1997‑98 year of income or the 1998‑1999 year of income (the
qualifying year of income ):
(i) a company that would otherwise be prevented, by section 63B or 63C of the
Income Tax Assessment Act 1936 or by Subdivision 165‑C or 175‑C of theIncome Tax Assessment Act 1997 , from deducting in the qualifying year of income an amount in respect of a debt would not be so prevented; or(ii) a company that would otherwise be prevented by Subdivision 165‑A, 175‑A or 175‑B of the
Income Tax Assessment Act 1997 from deducting an amount in the qualifying year of income would not be so prevented; or(iii) a company that would otherwise be required to calculate its taxable income for the qualifying year of income in accordance with section 50C of the
Income Tax Assessment Act 1936 would not be so required; or(iv) a company that would otherwise not be entitled, in calculating its taxable income for the qualifying year of income in accordance with section 50C of the
Income Tax Assessment Act 1936 , to take into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company under section 50D, would be so entitled; or(v) a company that would otherwise be required to calculate its taxable income and tax loss for the qualifying year of income under Subdivision 165‑B of the
Income Tax Assessment Act 1997 would not be so required; or(vi) a company that would otherwise be prevented by Subdivision 165‑CA or 175‑CA of the
Income Tax Assessment Act 1997 from applying in the qualifying year a net capital loss from an earlier year of income would not be so prevented; or(vii) a company that would otherwise be required to calculate its net capital gain and net capital loss for the qualifying year under Subdivision 165‑CB or 175‑CB of the
Income Tax Assessment Act 1997 would not be so required; and(c) the trust concerned passes the family control test (see section 272‑87 of the trust loss etc. Schedule):
(i) if the qualifying year of income is the 1996‑97 year of income or the 1997‑98 year of income—at all times from the beginning of that year of income until the end of the 1998‑99 year of income; or
(ii) if the qualifying year of income is the 1998‑99 year of income—at the end of the 1998‑99 year of income; and
(d) the
Taxation Laws Amendment Act (No. 2) 2000 receives the Royal Assent:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—after the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—after the end of 2 months after the end of that year of income;
the election can instead specify the qualifying year of income.
(2) If:
(a) a family trust election can be made in accordance with subsection 272‑80(2) of the trust loss etc. Schedule in relation to a non‑fixed trust (within the meaning of section 272‑70 of the trust loss etc. Schedule) specifying the 1999‑2000 year of income; and
(b) a franked dividend or a franked distribution (both within the meaning of section 177EA of the
Income Tax Assessment Act 1936 ) was included in the assessable income of the trust of the 1997‑98 year of income or the 1998‑99 year of income (thequalifying year of income ); and(c) the trust concerned passes the family control test (see section 272‑87 of the trust loss etc. Schedule):
(i) if the qualifying year of income is the 1997‑98 year of income—at all times from the beginning of that year of income until the end of the 1998‑99 year of income; or
(ii) if the qualifying year of income is the 1998‑99 year of income—at the end of the 1998‑99 year of income; and
(d) either the
Taxation Laws Amendment Act (No. 2) 1999 or theTaxation Laws Amendment Act (No. 2) 2000 , or both, receive the Royal Assent:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—after the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—after the end of 2 months after the end of that year of income;
the election can instead specify the qualifying year of income.
(3) The election must:
(a) be in a form and manner approved by the Commissioner; and
(b) be made:
(i) if the trustee is required to furnish a return for the 1999‑2000 year of income—by the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1999‑2000 year of income—before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.
(4) If a family trust election is made in accordance with subitem (3) specifying the qualifying year:
(a) if the trustee is required to furnish a return for the 1999‑2000 year of income—such information about the election as is required by the return must be included in the return; and
(b) if the trustee is not required to furnish a return for that year of income—the trustee must, before the end of 2 months after the end of the 1999‑2000 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the
Gazette , requires.
(5) If:
(a) a family trust election does specify the qualifying year of income in accordance with this item; and
(b) the trust is not prevented by the trust loss etc. Schedule from deducting a tax loss, or an amount in respect of a debt, and is not required to work out its net income and tax loss under Division 268 of that Schedule in the qualifying year or any later year of income that occurs before the 1999‑2000 year of income;
no liability to pay family trust distribution tax arises under Division 271 of the trust loss etc. Schedule in respect of a conferral of a present entitlement to, or a distribution of, income or capital that took place during the qualifying year or the later year of income.
(1) Subject to this item and item 23A, an interposed entity election cannot specify a year of income under subsection 272‑85(1) of the trust loss etc. Schedule that is before the 1997‑98 year of income.
(2) If:
(a) a trustee makes a family trust election under subitem 22(3) (as inserted by the
Taxation Laws Amendment Act (No. 2) 2000 ); and(b) an interposed entity election can be made in accordance with subsection 272‑85(2) of the trust loss etc. Schedule in relation to the family trust election specifying a day in the 1998‑99 year of income; and
(c) the company, partnership or trust concerned passes the family control test (see section 272‑87 of the trust loss etc. Schedule):
(i) if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1996‑97 year of income—at all times from a day in that year of income until the end of the 1997‑98 year of income; or
(ii) if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1997‑98 year of income—at the end of the 1997‑98 year of income;
the interposed entity election can instead specify:
(d) if subparagraph (c)(i) of this subitem applies—the day mentioned in that subparagraph or a later day in the qualifying year of income; or
(e) if subparagraph (c)(ii) applies—a day in the qualifying year of income;
provided the day specified is not before the day on which the family trust election came into force.
(3) The election must:
(a) be in writing in a form and manner approved by the Commissioner; and
(b) be made:
(i) if the trustee is required to furnish a return for the 1998‑99 year of income—by the time when the trustee furnishes the return; or
(ii) if the trustee is not required to furnish a return for the 1998‑99 year of income—before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.
(4) If an interposed entity election is made in accordance with subitem (3) specifying a day in the qualifying year of income:
(a) if the company, the partners or the trustee is required to furnish a return for the 1998‑99 year of income—such information about the election as is required by the return must be included in the return; and
(b) if the company, the partners or the trustee is not required to furnish a return for that year of income—the company, the partners or the trustee must, before the end of 2 months after the end of the 1998‑99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the
Gazette , requires.
(1) If:
(a) a trustee makes a family trust election under subitem 22A(3); and
(b) an interposed entity election can be made in accordance with subsection 272‑85(2) of the trust loss etc. Schedule in relation to the family trust election specifying a day in the 1999‑2000 year of income; and
(c) the company, partnership or trust concerned passes the family control test (see section 272‑87 of the trust loss etc. Schedule):
(i) if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1996‑97 year of income or the 1997‑98 year of income—at all times from a day in that year of income until the end of the 1998‑99 year of income; or
(ii) if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1998‑99 year of income—at the end of the 1998‑99 year of income;
the interposed entity election can instead specify:
(d) if subparagraph (c)(i) of this subitem applies and the qualifying year of income is the 1996‑1997 year of income—the day mentioned in that subparagraph, a later day in the 1996‑97 year of income or a day in the 1997‑1998 year of income; or
(e) if subparagraph (c)(i) of this subitem applies and the qualifying year of income is the 1997‑1998 year of income—the day mentioned in that subparagraph or a later day in the 1997‑98 year of income; or
(f) if subparagraph (c)(ii) applies—a day in the 1998‑99 year of income;
provided the day specified is not before the day on which the family trust election came into force.
(2) The election must:
(a) be in a form and manner approved by the Commissioner; and
(b) be made:
(i) if the company, partners or the trustee is required to furnish a return for the 1999‑2000 year of income—by the time when the company, partners or trustee furnishes the return; or
(ii) if not—before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.
(3) If an interposed entity election is made in accordance with subitem (2) specifying the qualifying year:
(a) if the company, partners or the trustee is required to furnish a return for the 1999‑2000 year of income—such information about the election as is required by the return must be included in the return; and
(b) if the company, partners or the trustee is not required to furnish a return for that year of income—the company, the partners or the trustee must, before the end of 2 months after the end of the 1999‑2000 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the
Gazette , requires.
(1) This item applies if, apart from the item, the condition in section 266‑40 of the trust loss etc. Schedule would not be met by a trust.
(2) If:
(a) the test period mentioned in section 266‑40 is:
(i) if that section is being applied for the purposes of section 266‑25—the test period resulting from the application of subitem 14(2) or the test period starting at the beginning of the 1995‑96 or 1996‑97 year of income; or
(ii) if that section is being applied for the purposes of section 266‑30—the test period starting at the beginning of the 1994‑95, 1995‑96 or 1996‑97 year of income; or
(iii) if that section is being applied for the purposes of section 266‑35—the test period resulting from the application of subitem 15(2); and
(b) either:
(i) 2 individuals each had, directly or indirectly, and for their own benefit, a 50% share of the income and a 50% share of the capital of the trust; or
(ii) an individual had, directly or indirectly, and for his or her own benefit, a 50% share of the income and a 50% share of the capital of the trust and a non‑fixed trust (other than a family trust) also had, directly or indirectly, a 50% share of the income and a 50% share of the capital of the trust;
at the start of the following period (the
qualifying period ):
(iii) if section 266‑40 is being applied for the purposes of section 266‑30 and the test period mentioned in section 266‑40 started at the beginning of the 1994‑95 year of income—the part of the test period that begins at 1995 Budget time and ends at the end of the test period; or
(iv) in any other case—the test period; and
(c) at all later times during the qualifying period, the same individual (being one of the 2 individuals mentioned in subparagraph (b)(i) or the individual mentioned in subparagraph (b)(ii)) had, directly or indirectly, and for the individual’s own benefit, fixed entitlements to at least a 50% share of the income and a 50% share of the capital of the trust;
the condition in section 266‑40 is met.
(3) If:
(a) the test period mentioned in section 266‑40 began after 1996 Budget time; and
(b) at all times during the period from immediately before 1996 Budget time until the start of the test period:
(i) 2 individuals each had, directly or indirectly, and for their own benefit, a 50% share of the income and a 50% share of the capital of the trust; or
(ii) an individual had, directly or indirectly, and for his or her own benefit, a 50% share of the income and a 50% share of the capital of the trust and a non‑fixed trust (other than a family trust) also had, directly or indirectly, a 50% share of the income and a 50% share of the capital of the trust; and
(c) at all times during the test period, the same individual (being one of the 2 individuals mentioned in subparagraph (b)(i) or the individual mentioned in subparagraph (b)(ii)) had, directly or indirectly, and for the individual’s own benefit, fixed entitlements to at least a 50% share of the income and a 50% share of the capital of the trust;
the condition in section 266‑40 is met.
25
Transitional—schemes to take advantage of deductions (1) This item modifies the effect of Division 270 of the trust loss etc. Schedule where the trust mentioned in paragraph 270‑10(1)(a) of that Schedule is a family trust.
(2) If:
(a) a person was at any time before 1995 Budget time an outsider to a family trust; and
(b) the person ceased to be an outsider to the trust at 1995 Budget time because the person has made an interposed entity election;
the person is taken for the purposes of Division 270 not to have been an outsider to the trust at any time before 1995 Budget time.
The trust loss etc. Schedule and subitems 14(4), 15(4) and 19(4) have effect in relation to things done before 1997 Budget time as if the definition of
family in section 272‑95 of that Schedule were replaced by the following definition:The
family of an individual (thetest individual ) consists of all of the following (if applicable):
(a) the test individual’s spouse or former spouse;
(b) a parent, brother, sister, child, nephew or niece of:
(i) the test individual; or
(ii) the test individual’s spouse; or
(iii) a former spouse of the test individual;
(c) a child of any individual covered by paragraph (a) or (b) who, under the trust, is capable of benefiting on the death of the test individual;
(d) a grandparent, great‑grandparent, aunt or uncle of the test individual;
(e) a child of a child of the test individual;
(f) the spouse or a former spouse of any individual covered by any of paragraphs (a) to (e).
Add:
4 | Certain trusts cannot deduct a bad debt if there has been a change in ownership or control or an abnormal trading in their units |
Add:
1. | A trust has had a change of ownership or control or there has been an abnormal trading in its units: · if this happens in the income year, it works out its net income and tax loss in a special way; or · if this happens at any time from the start of a loss year until the end of the income year, it cannot deduct a tax loss from the loss year. This will not be the case if the trust is an excepted trust. However, if it became one by making a family trust election, a special tax may be payable on certain distributions and other amounts. | Divisions 266, 267 and 268 of Schedule 2F to the |
2. | A trust is involved in a scheme to take advantage of deductions. The trust may be prevented from making full use of them. | Division 270 of Schedule 2F to the |
29
Subsection 995‑1(1) (after paragraph (a) of the definition of film component of a tax loss ) Insert:
Note: The meaning of
film component of a tax loss given by section 375‑805 of this Act is affected by section 268‑65 of Schedule 2F to theIncome Tax Assessment Act 1936 .
30
Subsection 995‑1(1) (after paragraph (a) of the definition of tax loss ) Insert:
Note: The meaning of
tax loss in section 36‑10 is affected by section 268‑60 of Schedule 2F to theIncome Tax Assessment Act 1936 .
31
Section 136 (at the end of the definition of fringe benefit ) Add:
; or (q) a benefit constituted by the conferral of a present entitlement to, or a distribution of, income or capital to the extent that subsection 271‑105(1) of Schedule 2F to the
Income Tax Assessment Act 1936 would prevent the inclusion of the amount or value of the income or capital in assessable income, assuming that it would otherwise be so included.
The amendment made by this Part applies to benefits conferred either before or after the commencement of this Part.
33
Section 43 (after paragraph (a) of the definition of adjusted taxable income ) Insert:
(aa) the amount (if any) by which the amount worked out under paragraph (a) would be increased if it were instead worked out ignoring subsection 271‑105(1) of Schedule 2F to the Income Tax Assessment Act; and
The amendment made by this Part applies to the calculation of adjusted taxable income for the financial year that began on 1 July 1996 or a later financial year.
The
For all relevant information pertaining to application, saving or transitional provisions
Act | Number and year | Date of Assent | Date of commencement | Application, saving or transitional provisions | ||
17, 1998 | 16 Apr 1998 | 16 Apr 1998 | ||||
58, 2000 | 31 May 2000 | Schedule 11 (items 2–11): Royal Assent | Sch. 11 (item 11) | |||
| ||||||
| 57, 2002 | 3 July 2002 | Schedule 12 (items 77, 86): Royal Assent | Sch. 12 (item 86) | ||
57, 2002 | 3 July 2002 | Schedule 12 (item 64): | — | |||
75, 2010 | 28 June 2010 | Schedule 6 (item 109): 29 June 2010 | — | |||
(a) Subsection 2(1) (item 62) of theTaxation Laws Amendment Act (No. 2) 2002 provides as follows:
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table.
Schedule 12, item 64 | Immediately after item 23 of Schedule 1 to the | 16 April 1998 |
| |
Provision affected | How affected |
S. 4......................................... | rep. No. 75, 2010 |
Item 22................................... | am. No. 58, 2000 |
Item 22A................................. | ad. No. 58, 2000 |
Item 23................................... | am. No. 58, 2000; No. 57, 2002 |
Item 23A................................. | ad. No. 58, 2000 |
Taxation Laws Amendment Act (No. 2) 2000 (No. 58, 2000)
11
Continuation of previous transitional election provisions In addition to the effect that items 22 and 23 of Schedule 1 to the
Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 have as a result of the amendments made by this Schedule, those items continue to have the effect that they would have had if the amendments had not been made.
Taxation Laws Amendment Act (No. 2) 2002 (No. 57, 2002)
An item in a Schedule to an Act that is repealed by an item in this Part is taken never to have had any effect.
0
0
0