(ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution.
(2) If this section applies:
(a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed; or
(b) if the trustee is a company—the trustee, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed.
271‑20 Tax liability where interposed trust makes distribution etc. outside family group
(1) This section applies if:
(a) the trustee of a trust makes an interposed entity election for the trust to be included in the family group of the individual specified in a family trust election; and
(b) at any time while the election is in force (including a time before it was made), the trust confers a present entitlement to, or distributes, income or capital of the trust:
(i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or
(ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution.
(2) If this section applies:
(a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed; or
(b) if the trustee is a company—the trustee, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed.
271‑25 Tax liability where interposed partnership makes distribution etc. outside family group
(a) the partners in a partnership make an interposed entity election for the partnership to be included in the family group of the individual specified in a family trust election; and
(b) at any time while the interposed entity election is in force (including a time before it was made), the partnership confers a present entitlement to, or distributes, income or capital:
(i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or
(ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution.
(2) If this section applies, the partners, together with each person who at the time of the conferral or distribution was a director of any partner that was a company, are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed.
271‑30 Tax liability where interposed company makes distribution outside family group
(1) This section applies if:
(a) a company makes an interposed entity election for the company to be included in the family group of the individual specified in a family trust election; and
(b) at any time while the interposed entity election is in force (including a time before it was made), the company confers a present entitlement to, or distributes, income or capital of the company:
(i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or
(ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution.
(2) If this section applies, the company, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital to which the entitlement relates, or that is distributed.
271‑35 Avoidance of double‑counting
If, after conferring a present entitlement to income or capital as mentioned in paragraph 271‑15(1)(b), 271‑20(1)(b), 271‑25(1)(b) or 271‑30(1)(b), the trust, partnership or company concerned distributes the income or capital in satisfaction of the entitlement, the distribution is disregarded for the purposes of that paragraph.
271‑40 Exclusion of directors from liability to pay tax
(1) This section applies to a director of a company who is included among persons who are jointly and severally liable to pay family trust distribution tax under section 271‑15, 271‑20, 271‑25 or 271‑30.
Director not taking part in distribution decision
(2) If:
(a) the director did not take part in any decision to confer the entitlement or make the distribution concerned; and
(b) if the director was aware of the proposal to make the decision or of the fact that it was made—the director took reasonable steps to prevent the making, or the implementation, of the decision;
the director is not included among the persons jointly and severally liable.
Director taking part in distribution decision
(3) If:
(a) the director took part in any decision to confer the entitlement or make the distribution; and
(b) the director voted against, or otherwise disagreed with the decision; and
(c) the director took reasonable steps to prevent the implementation of the decision;
the director is not included among the persons jointly and severally liable.
271‑45 Requirements for section 271‑55 notice to family trust
Notice about non‑resident distributions
(1) The Commissioner may give a notice in accordance with section 271‑55 (which deals with information about distributions etc. by certain non‑residents) to the trustee of a trust (the primary entity) who has made a family trust election, provided the requirements of subsections (2) to (4) of this section are met.
First requirement
(2) At a time (the test time) while the election is in force (including a time before it was made), the primary entity must have conferred a present entitlement to, or distributed, income or capital upon or to a company, partnership or trust (the secondary entity) that at the time was, because of an interposed entity election, a member of the family group of the individual (the primary individual) specified in the family trust election.
Second requirement
(3) When the Commissioner gives the notice:
(a) if the secondary entity is a partnership—a partner must be a non‑resident; and
(b) if the secondary entity is a company—the company must be a non‑resident; and
(c) if the secondary entity is a trust—either:
(i) a trustee must be a non‑resident; or
(ii) the central management and control of the trust must be outside Australia.
Third requirement
(4) The Commissioner must give the notice before the later of:
(a) 5 years after the conferral or distribution mentioned in subsection (2); and
(b) the end of the period during which the primary entity is required by section 262A to retain records in relation to the income year in which the conferral or distribution took place.
271‑50 Requirements for section 271‑55 notice to interposed entity
Notice about non‑resident distributions
(1) If:
(a) a company, the trustee of a trust or the partners in a partnership (which company, trust or partnership is the primary entity) makes an interposed entity election to be included in the family group of an individual specified in a family trust election; and
(b) the requirements of subsections (2) to (4) are met;
the Commissioner may give the company, trustee or partners a notice in accordance with section 271‑55 (which deals with information about distributions etc. by certain non‑residents).
First requirement
(2) At a time (the test time) while the election was in force (including a time before it was made), the primary entity must have conferred a present entitlement to, or distributed, income or capital upon or to a company, partnership or trust (a secondary entity), where the secondary entity:
(a) was the family trust whose trustee made the family trust election; or
(b) was, because of an interposed entity election that was in force at the time, included in the family group of the individual (the primary individual) specified in the family trust election.
Second requirement
(3) When the Commissioner gives the notice:
(a) if the secondary entity is a partnership—a partner must be a non‑resident; and
(b) if the secondary entity is a company—the company must be a non‑resident; and
(c) if the secondary entity is a trust—either:
(i) a trustee must be a non‑resident; or
(ii) the central management and control of the trust must be outside Australia.
Third requirement
(4) The Commissioner must give the notice before the later of:
(a) 5 years after the conferral or distribution mentioned in subsection (2); and
(b) the end of the period during which the primary entity is required by section 262A to retain records in relation to the income year in which the conferral or distribution took place.
271‑55 Notice requiring information about non‑resident distributions etc.
Information required
(1) The notice that the Commissioner may give the company, partnership or trustee if the requirements of subsections 271‑45(2) to (4) or 271‑50(2) to (4) are met must require the company, partners or trustee to give the Commissioner specified information about conferrals of present entitlements to, or distributions of, income or capital since the test time by any company, partnership or trust covered by subsection (2) of this section.
Entities covered
(2) The following are covered by this subsection:
(a) the secondary entity; and
(b) any company in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where the company was a non‑resident, and the election was in force, when the conferral or distribution took place; and
(c) any partnership in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where any of the partners was a non‑resident, and the election was in force, when the conferral or distribution took place; and
(d) any trust in respect of which a family trust election specifying the primary individual had been made or in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where, when the conferral or distribution took place, either a trustee was a non‑resident or the trust’s central management and control were outside Australia.
Information not within knowledge
(3) The information need not be within the knowledge of the company, partners or trustee at the time the notice is given.
Period for giving information
(4) The notice must specify a period within which the company, partners or 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.
Company’s liability
(5) If the company does not give the information within the period or within such further period as the Commissioner allows, it, together with each person who was a director of the company at the test time, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital mentioned in subsection 271‑50(2).
Partners’ liability
(6) If the partners do not give the information within the period or within such further period as the Commissioner allows, they, together with each person who at the test time was a director of any partner that was a company, are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital mentioned in subsection 271‑50(2).
Trustee’s liability
(7) If the trustee does not give the information within the period or within such further period as the Commissioner allows:
(a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital mentioned in subsection 271‑45(2) or 271‑50(2); or
(b) if the trustee is a company—the trustee, together with each person who was a director of the company at the test time, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998, on the amount or value of the income or capital mentioned in subsection 271‑45(2) or 271‑50(2).
271‑60 Tax liability where non‑resident family trust’s tax unpaid
Conditions for tax liability
(1) If:
(a) tax under section 271‑15 on the amount or value of income or capital of a family trust becomes due and payable; and
(b) the Commissioner determines, in writing, at or after the time when the tax became due and payable, that it is unlikely that the whole or part (the unpaid amount) of the tax will be paid; and
(c) when the Commissioner makes the determination:
(i) a trustee of the family trust is a non‑resident; or
(ii) the central management and control of the family trust is outside Australia;
then the consequences set out in subsection (2) result.
Tax liability
(2) The consequences are:
(a) if there is only one person covered by subsection (3)—that person is liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998, on the unpaid amount; and
(b) if there are 2 or more persons covered by subsection (3)—those persons are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998, on the unpaid amount.
Persons liable under subsection (2)
(3) The persons covered by this subsection are:
(a) the trustee of any trust to which subsection (4) applies; and
(b) if the trustee of any such trust is a company—any person who is a director of the company when the determination is made; and
(c) any company to which subsection (5) applies; and
(d) any person who is a director of such a company when the determination is made.
Trust mentioned in paragraph (3)(a)
(4) This subsection applies to a trust if the trust would be:
(a) prevented by Division 266 or 267 from deducting a tax loss or amount in respect of a debt; or
(b) required by Division 266 or 267 to work out its net income and tax loss under Division 268;
in the income year in which the determination is made, or an earlier income year, if the family trust had not been a family trust.
Company mentioned in paragraph (3)(c)
(5) This subsection applies to a company if, in its return of income for the income year in which the determination is made or an earlier income year:
(a) the company deducted an amount in respect of a debt, where it was allowed to do so but, because of former section 63B or 63C, or Subdivision 165‑C, 709‑D or 719‑I of the Income Tax Assessment Act 1997, it would not have been if the family trust had not been a family trust; or
(b) the company deducted a tax loss (within the meaning of the Income Tax Assessment Act 1997) where it was allowed to do so but, because of Subdivision 165‑A of that Act, it would not have been if the family trust had not been a family trust; or
(c) the company applied a net capital loss (within the meaning of former Part IIIA of this Act) where it was allowed to do so but, because of former subsection 160ZC(5), it would not have been if the family trust had not been a family trust; or
(d) the company applied a net capital loss (within the meaning of the Income Tax Assessment Act 1997) where it was allowed to do so but, because of Subdivision 165‑CA of that Act, it would not have been if the family trust had not been a family trust;
(e) the company did not calculate its taxable income in accordance with former section 50C of this Act where it was not required to do so but would have been if the family trust had not been a family trust; or
(f) the company calculated its taxable income in accordance with former section 50C and took into account an amount, by reason of former subsection 50D(2), in ascertaining the eligible notional loss of the company under former section 50D, where it was required to calculate its taxable income in accordance with former section 50C and entitled to take the amount into account but would not have been so entitled if the family trust had not been a family trust; or