(g) the company did not calculate its taxable income and tax loss under Subdivision 165‑B of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust; or
(h) the company did not calculate its net capital gain and net capital loss under Subdivision 165‑CB of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust.
271‑65 Tax liability where non‑resident interposed entity’s tax unpaid
When section applies
(1) This section applies if:
(a) a company, the partners in a partnership or the trustee of a trust makes an interposed entity election to be included in the family group of an individual (the primary individual); and
(b) while the interposed entity election is in force, the company, partnership or trust (the primary interposed entity) confers a present entitlement to, or distributes, income or capital; and
(c) family trust distribution tax becomes due and payable on the amount or value of the income or capital.
Determination about unpaid tax
(2) If:
(a) 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
(b) at the time:
(i) if the primary interposed entity is a company—the company is a non‑resident; and
(ii) if the primary interposed entity is a partnership—a partner is a non‑resident; and
(iii) if the primary interposed entity is a trust—either a trustee is a non‑resident or the central management and control of the trust is outside Australia;
then the consequences in subsection (3) result.
Consequences
(3) The consequences are:
(a) if there is only one person covered by subsection (4)—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 (4)—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 covered
(4) The persons covered by this subsection are:
(a) any company to which subsection (5) applies; and
(b) any person who is a director of such a company when the determination is made; and
(c) any partner in a partnership to which subsection (5) applies; and
(d) if any partner in any such partnership is a company—any person who is a director of the company when the determination is made; and
(e) the trustee of any trust to which subsection (5) applies; and
(f) if the trustee of any such trust is a company—any person who is a director of the company when the determination is made.
Entities making election and distribution etc.
(5) This subsection applies to any company, partnership or trust (an entity), other than the primary interposed entity, meeting the following conditions:
(a) the company, the partners in the partnership or the trustee of the trust made:
(i) an interposed entity election to be included in the family group of the primary individual; or
(ii) a family trust election specifying the primary individual; and
(b) while that election and the interposed entity election made in respect of the primary interposed entity were in force, and before the Commissioner made the determination mentioned in paragraph (2)(a), the entity conferred a present entitlement to, or distributed, income or capital upon or to an eligible entity (see subsection (6)).
Eligible entities
(6) Each of the following is an eligible entity:
(a) the primary interposed entity;
(b) a 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;
(c) a 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;
(d) a trust:
(i) in respect of which an interposed entity election had been made to be included in the family group of the primary individual; or
(ii) in respect of which a family trust election had been made specifying the primary individual;
where, when the conferral or distribution took place, the election was in force and either a trustee was a non‑resident or the trust’s central management and control were outside Australia.
271‑70 Reduction of liability where tax paid
If family trust distribution tax (the secondary tax) becomes payable under section 271‑60 or 271‑65 on an amount of family trust distribution tax (the primary tax) that the Commissioner determined was unlikely to be paid:
(a) if any of the primary tax is later paid—any liability to the secondary tax existing at the time of the payment is reduced by the amount of the payment; and
(b) if any of the secondary tax is later paid—any liability to the primary tax existing at the time of the payment is reduced by the amount of the payment.
271‑75 Payment of family trust distribution tax
Tax under sections 271‑15 to 271‑30
(1) Family trust distribution tax under any of sections 271‑15 to 271‑30 is due and payable:
(a) in a case where the conferral or distribution on whose amount or value the tax is payable was made before the day on which the election was made—at the end of 21 days after the day on which the election was made; or
(b) in any other case—at the end of 21 days after the day on which the conferral or distribution, on whose amount or value the tax is payable, was made;
or by the end of such later day as the Commissioner, in special circumstances, allows.
Tax under section 271‑55
(2) Family trust distribution tax under section 271‑55 is due and payable at the end of 21 days after the end of the period or further period mentioned in subsection (5), (6) or (7), as the case requires, of that section.
Tax under section 271‑60 or 271‑65
(3) Family trust distribution tax under section 271‑60 or 271‑65 is due and payable at the end of 21 days after the day, or the last day, on which the notice mentioned in subsection 271‑90(2) is given.
Debt due
(4) Family trust distribution tax, when it becomes due and payable, is a debt due to the Commonwealth and payable to the Commissioner.
Application
(5) Subsection (4) does not apply in relation to any family trust distribution tax that becomes due and payable on or after 1 July 2000.
Note: For provisions about collection and recovery of family trust distribution tax and other amounts on or after 1 July 2000, see Part 4‑15 in Schedule 1 to the Taxation Administration Act 1953.
271‑80 Late payment of family trust distribution tax
If any of the family trust distribution tax which a person is liable to pay remains unpaid 60 days after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) began at the beginning of the 60th day after the day by which the family trust distribution tax was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the family trust distribution tax;
(ii) general interest charge on any of the family trust distribution tax.
Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.
271‑90 Notice of liability
Notice for purposes of section 271‑15 etc.
(1) The Commissioner may give a person or persons, by post or otherwise, a notice specifying:
(a) the amount of any family trust distribution tax that the Commissioner has ascertained is payable under any of sections 271‑15 to 271‑30 and 271‑55 by the person or persons; and
(b) the day on which that tax became or will become due and payable.
Notice for purposes of section 271‑60 or 271‑65
(2) The Commissioner must give persons, by post or otherwise, a notice specifying the amount of any family trust distribution tax that the Commissioner has ascertained is payable under section 271‑60 or 271‑65 by the persons.
Effect of notice on liability etc.
(3) The liability of a person or persons to family trust distribution tax on the amount or value of a distribution, and (except in the case of a notice under subsection (2)) the due date for payment of the tax, are not dependent on, or in any way affected by, the giving of a notice in respect of the amount.
Amendment of notice
(4) The Commissioner may at any time amend a notice. An amended notice is a notice for the purposes of this section.
Inconsistency between notices
(5) If there is an inconsistency between notices that relate to the same subject matter, the later notice prevails to the extent of the inconsistency.
Objections
(6) A person who is or persons who are dissatisfied with a notice made in relation to the person or persons may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.
271‑95 Request for notice of liability
(1) A person or persons may make a written request to the Commissioner to be given a notice under subsection 271‑90(1) or (2) in respect of specified circumstances in which family trust distribution tax may be payable.
Compliance with request for subsection 271‑90(1) notice
(2) In the case of a notice under subsection 271‑90(1), the Commissioner must, subject to subsection (4) of this section, comply with the request if it is lodged with the Commissioner before the end of the 21 days mentioned in subsection 271‑75(1) or (2), or before the end of such later day as the Commissioner allows.
Compliance with request for subsection 271‑90(2) notice
(3) In the case of a notice under subsection 271‑90(2), the Commissioner must, subject to subsection (4) of this section, comply with the request regardless of when it is lodged.
Further information
(4) If the Commissioner considers that the notice cannot be given unless the person making the request gives the Commissioner further information about the circumstances in which the family trust distribution tax may be payable, the Commissioner must request the person to give the Commissioner the information.
Failure to give information
(5) If the person does not give the information, the Commissioner is not required to comply with the request to give the notice.
271‑105 Amounts subject to family trust distribution tax not assessable
(1) If:
(a) family trust distribution tax (the tax payable) becomes payable under any of sections 271‑15 to 271‑30 and 271‑55 on the amount or value of income or capital of a company, partnership or trust; and
(b) a payment (the tax payment amount) of the whole or part of the tax payable is made, or a reduction (also the tax payment amount) in the whole or part of the tax payable takes place under paragraph 271‑70(b); and
(c) taking into account any previous application of this subsection, the whole or part of the amount or value of the income or capital is included in the assessable income of the company, partnership or trust or of any other person;
the amount included in the assessable income is reduced by the amount worked out using the formula in subsection (2).
(2) The formula is:
Start formula start fraction Tax payment amount over Tax payable end fraction times Original assessable amount end formula
The original assessable amount is so much of the amount or value of the income or capital as, disregarding any previous reductions under this section, is included in the assessable income of the company, partnership or trust or of any other person.
(3) The amount of the reduction is not assessable income and is not exempt income.
Division 272—Interpretation
Subdivision 272‑A—Fixed entitlement to share of income or capital
272‑5 Fixed entitlement to share of income or capital of a trust
(1) If, under a trust instrument, a beneficiary has a vested and indefeasible interest in a share of income of the trust that the trust derives from time to time, or of the capital of the trust, the beneficiary has a fixed entitlement to that share of the income or capital.
Case where interest not defeasible
(2) If:
(a) a person holds units in a unit trust; and
(b) the units are redeemable or further units are able to be issued; and
(c) if units in the unit trust are listed for quotation in the official list of an approved stock exchange—the units held by the person will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and
(d) if the units are not listed as mentioned in paragraph (c)—the units held by the person will be redeemed, or any further units will be issued, for a price determined on the basis of the net asset value, according to Australian accounting principles, of the unit trust at the time of the redemption or issue;
then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the person’s interest, as a unit holder, in the income or capital of the unit trust is defeasible.
Deemed fixed entitlement
(3) If:
(a) a beneficiary with an interest in a share of income that the trust derives from time to time, or of the capital of a trust, does not have a fixed entitlement to the share; and
(b) the Commissioner considers that the beneficiary should be treated as having the fixed entitlement, having regard to:
(i) the circumstances in which the entitlement is capable of not vesting or the defeasance can happen; and
(ii) the likelihood of the entitlement not vesting or the defeasance happening; and
(iii) the nature of the trust;
the beneficiary has the fixed entitlement.
272‑10 Fixed entitlement to share of income or capital of a company
(1) If a shareholder in a company holds shares carrying the right to receive some or all of the dividends that may be paid by the company, the shareholder has a fixed entitlement to a share of the income of the company equal to the percentage of the total dividends represented by the dividends that the shareholder has a right to receive.
(2) If a shareholder in a company holds shares carrying the right to receive the whole or part of any distribution of the paid‑up share capital of the company in the event of any return of capital to shareholders, the shareholder has a fixed entitlement to a share of the capital of the company equal to the percentage of the total distribution represented by the amount that the shareholder has a right to receive.
272‑15 Fixed entitlement to share of income or capital of a partnership
(1) If, under a partnership agreement:
(a) a partner is entitled to a share of income that the partnership derives from time to time, or of the capital of the partnership; and
(b) the share is not able to be varied;
the partner has a fixed entitlement to that share of the income or capital.
Deemed fixed entitlement
(2) If:
(a) a partner does not have a fixed entitlement to a share of income that the partnership derives from time to time, or of the capital of a partnership, only because the partner’s share of the income or capital is able to be varied; and
(b) the Commissioner considers that the partner should be treated as having the fixed entitlement, having regard to:
(i) the circumstances in which the share is able to be varied; and
(ii) the likelihood of the variation happening; and
(iii) the nature of the partnership;
the partner has the fixed entitlement.
272‑20 Fixed entitlement to share of income or capital held indirectly
A person holds a fixed entitlement to a share of the income or capital of a company, partnership or trust indirectly if the person holds the entitlement indirectly through fixed entitlements to shares of the income or capital, respectively, of interposed companies, partnerships or trusts.
272‑25 Special cases of fixed entitlements held directly or indirectly
Coverage of section
(1) This section affects references in this Schedule (other than in subparagraph 269‑75(b)(ii) and section 272‑30) to a person or individual having, directly or indirectly, a fixed entitlement to a share of the income or capital of a company, partnership or trust (the main entity) at a particular time (the test time).
Note: This section will not affect a reference to a person or individual having a fixed entitlement where the phrase “directly or indirectly” is not used.
Certain interposed government bodies and special companies
(2) If at the test time a government body or a special company has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity, subsection (4) or (5) applies.
To find out the meaning of government body and special company: see section 272‑140.
Certain interposed funds
(3) If:
(a) a fund is:
(i) a complying superannuation fund or complying approved deposit fund in relation to the income year in which the test time occurs; or
(ii) a superannuation fund for foreign residents at the test time; and
(b) at the test time the fund has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity;
subsection (4) or (5) applies.
Note: See subsection 6(1) for the meaning of complying superannuation fund, complying approved deposit fund and superannuation fund for foreign residents.
Government bodies, and funds or companies with more than 50 members
(4) In the case of a government body, or a fund or company that has more than 50 members: