(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.
266‑60 Notices where requirements of section 266‑55 are met
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 4‑25 in Schedule 1 to the Taxation Administration Act 1953 for deducting the amount concerned, or for not working out the trust’s net income and tax loss under Division 268, in its return.
Subdivision 266‑C—Effect of change in ownership of unlisted widely held trust
266‑65 What this Subdivision is about
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.
Note: The exception mentioned in this section applies differently in relation to designated infrastructure project entities: see sections 415‑25 and 415‑30 of the Income Tax Assessment Act 1997.
266‑70 Diagram giving overview of this Subdivision
Diagram showing the effect of change in ownership of unlisted widely held trust
266‑75 Unlisted widely held trust may be denied tax loss deduction
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.
266‑80 Unlisted widely held trust may be required to work out its net income and tax loss in a special way
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.
Note: See section 415‑25 of the Income Tax Assessment Act 1997 if the trust was a designated infrastructure project entity during part, but not the whole, of the test period.
266‑85 Unlisted widely held trust may be denied debt deduction
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.
Note: Subdivisions 709‑D and 719‑I of the Income Tax Assessment Act 1997 also affect when a trust that used to be a member of a consolidated group or MEC group may deduct a debt that used to be owed to a member of the group and that the trust writes off as bad.
266‑90 If abnormal trading or end of income year, trust must pass the 50% stake test
(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.
266‑95 Deducting part of a tax loss
(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.
Subdivision 266‑D—Effect of abnormal trading on listed widely held trust
266‑100 What this Subdivision is about
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.
Note: The exceptions mentioned in this section apply differently in relation to designated infrastructure project entities: see sections 415‑25 and 415‑30 of the Income Tax Assessment Act 1997.
266‑105 Diagram giving overview of this Subdivision
Diagram showing effect of abnormal trading on listed widely held trust
266‑110 Listed widely held trust may be denied tax loss deduction
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.
266‑115 Listed widely held trust may be required to work out its net income and tax loss in a special way
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).
Note: See section 415‑25 of the Income Tax Assessment Act 1997 if the trust was a designated infrastructure project entity during part, but not the whole, of the test period.
266‑120 Listed widely held trust may be denied debt deduction
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.
Note: Subdivisions 709‑D and 719‑I of the Income Tax Assessment Act 1997 also affect when a trust that used to be a member of a consolidated group or MEC group may deduct a debt that used to be owed to a member of the group and that the trust writes off as bad.
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).
266‑125 There must be no abnormal trading (subject to 50% stake or business continuity exceptions)
(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 business continuity 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 business continuity test: see Subdivision 269‑F.
266‑130 Deducting part of a tax loss
(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.
266‑135 Listed widely held unit trust may be denied tax loss deduction otherwise allowable
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 business continuity test as mentioned in paragraph 266‑125(2)(b); and
(c) the Commissioner considers that the trust passed the business continuity 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 business continuity test in relation to the time immediately before the abnormal trading.
Subdivision 266‑E—Effect of abnormal trading on unlisted very widely held trust or wholesale widely held trust
266‑140 What this Subdivision is about
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.