(7) To revoke an election under subsection (6), the revocation must be made in the trust’s return of income for the income year in which the later time occurs. If the trustee is not required to give a return for the income year, the revocation must:
(a) be in writing and in the approved form; and
(b) specify the later time; and
(c) be given to the Commissioner before the end of:
(i) 2 months after the end of the income year in which the later time occurs; or
(ii) such later day as the Commissioner allows.
(8) To vary or revoke an election under subsection (5A), (5C) or (6A), the variation or revocation must be made in the trust’s return of income for the income year from which the variation or revocation is to be effective. If the trustee is not required to give a return for the income year, the variation or revocation must:
(a) be in writing and in the approved form; and
(b) specify the income year from which the variation or revocation is to be effective; and
(c) be given to the Commissioner on or before:
(i) 2 months after the end of that income year; or
(ii) such later day as the Commissioner allows.
When election is in force
(9) The election is in force:
(a) if it is not revoked—at all times after the election commencement time (see subsection (10)); or
(b) if it is revoked under subsection (6)—at all times from the election commencement time until the later time specified in the revocation; or
(c) if it is revoked under subsection (6A)—at all times from the election commencement time until the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8)).
Election commencement time
(10) The election commencement time is:
(a) if the trust does not pass the family control test (see section 272‑87) at all times in the income year specified—the earliest time from which the trust does pass the family control test for the remainder of that income year; or
(b) in any other case—the beginning of the income year specified.
Only one election
(11) The trustee must not make more than one election under this section in relation to the trust.
272‑85 Interposed entity election
Nature of election
(1) Subject to this section, if the trustee makes a family trust election, a company, the partners in any partnership or the trustee of any other trust may make an election (an interposed entity election) in accordance with this section that the company, partnership or trust is to be included, at all times after a specified day in a specified income year, in the family group of the individual specified in the family trust election.
(2) The election must be in writing and in the approved form.
Election to contain information
(3) The election must contain such information as the Commissioner requires.
Family control test must be passed
(4) The company, partnership or trust must pass the family control test (see section 272‑87) at the end of the income year.
Earlier year may be the specified year
(4A) The specified income year may be a year before the one in which the election is made if:
(a) at all times in the period from the beginning of the specified income year until 30 June in the income year before the one during which the election is made, the company, partnership or trust passes the family control test (see section 272‑87); and
(b) either:
(i) any conferrals of present entitlement to income or capital of the trust made by the trustee during that period have been made on; or
(ii) any distributions of income or capital of the trust made by the trustee during that period have been made to;
the individual specified in the family trust election or members of that individual’s family group.
Election generally cannot be revoked
(5) Subject to subsections (5A) and (5B), the election cannot be revoked.
Revocation cases
(5A) A company, the partners in any partnership or the trustee of a trust may, in respect of an income year during the period specified in subsection (5C), revoke the election if at the election commencement time, or at a later time, the entity was, or becomes, a member of the family group (within the meaning of subsection 272‑90(3A) or (5)) of the individual specified in the family trust election.
(5B) The election is taken to be revoked if the family trust election to which it relates is revoked.
Period to revoke the election
(5C) A company, the partners in any partnership or the trustee of a trust cannot revoke an election under subsection (5A) unless the revocation is in respect of an income year that occurs during the period:
(a) beginning at the later of:
(i) the beginning of the income year specified in the election; and
(ii) the beginning of the income year in which the entity became a member of the family group;
and finishing at the end of the fourth income year after the income year referred to in subparagraph (i) or (ii); or
(b) beginning at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year.
How revocation is made
(6) A revocation must be made in the entity’s return of income for the income year from which the revocation is to be effective. If the entity is not required to give a return for the income year, the revocation must:
(a) be in writing and in the approved form; and
(b) specify the income year from which the revocation is to be effective; and
(c) be given to the Commissioner on or before:
(i) 2 months after the end of that income year; or
(ii) such later day as the Commissioner allows.
When election is in force
(6A) The election is in force:
(a) if it is not revoked—at all times after the election commencement time (see subsection (6B)); or
(b) if it is revoked under subsection (5A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (6)); or
(c) if the family trust election to which it relates is revoked under subsection 272‑80(6)—at all times from the election commencement time until the later time specified in that revocation; or
(d) if the family trust election to which it relates is revoked under subsection 272‑80(6A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the family trust revocation is to be effective (see subsection 272‑80(8)).
Election commencement time
(6B) The election commencement time is:
(a) if the company, partnership or trust does not pass the family control test at all times in the specified income year—the later of:
(i) the beginning of the specified day; and
(ii) the earliest time from which the company, partnership or trust does pass the family control test for the remainder of the specified income year; or
(b) in any other case—the beginning of the specified day.
Restriction on multiple elections
(7) The company, partners or trustee must not make an election under this section that the company, partnership or trust is to be included in the family group of the individual specified in the family trust election in respect of more than one trust, unless the individual specified in each of the family trust elections is the same.
(8) For the purposes of subsection (7) disregard an election that has been revoked under subsection (5A) or (5B).
272‑87 Passing the family control test
Trusts
(1) A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if:
(a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of:
(i) the individual (the primary individual) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or
(ii) one or more members of the primary individual’s family (see section 272‑95); or
(iii) the primary individual and one or more members of the primary individual’s family; or
(b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual’s family; or
(c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of:
(i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or
(ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii).
Requirement for purposes of subsection (1)
(2) The requirement for the purposes of subsection (1) is that:
(a) the group has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust; or
(b) the group is able (directly or indirectly) to control the application of the capital or income of the trust; or
(c) the group is capable, under a scheme, of gaining the beneficial enjoyment in paragraph (a) or the control in paragraph (b); or
(d) the trustee of the trust is accustomed, under an obligation or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the group; or
(e) the group is able to remove or appoint the trustee of the trust; or
(f) the group has more than a 50% stake in the income or capital of the trust; or
(g) persons in the group are the only persons who, under the terms of the trust, can obtain the beneficial enjoyment of the income and capital of the trust.
Companies and partnerships
(3) A company or partnership in respect of which an interposed entity election is proposed to be made passes the family control test if a group consisting of:
(a) the individual who is specified in the family trust election mentioned in subsection 272‑85(1) in relation to the interposed entity election; or
(b) one or more members of the individual’s family (see section 272‑95); or
(c) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or
(d) any persons covered by any combination of the above paragraphs;
have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income or a greater than 50% share of the capital of the company or partnership.
272‑90 Family group
(1) This section states whether a person is a member of the family group of the individual (the primary individual) specified in the family trust election in relation to a conferral of a present entitlement to, or a distribution of, income or capital of a company, partnership or trust, upon or to the person.
Family member
(2) A member of the primary individual’s family (see section 272‑95) is a member of the primary individual’s family group in relation to the conferral or distribution.
Certain former family members
(2A) The following persons are members of the primary individual’s family group in relation to the conferral or distribution:
(a) a person who was a spouse of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage or relationship; and
(b) a person:
(i) who was the spouse of either the primary individual or of a member of the primary individual’s family immediately before the death of the primary individual or member of the primary individual’s family; and
(ii) who is now the spouse of a person who is not a member of the primary individual’s family; and
(c) a person who was a child of the spouse of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage or relationship of the primary individual or the member of the primary individual’s family.
Note: The fact that a person is a member of the family group of an individual under this subsection does not mean that the person is a member of the individual’s family under section 272‑95.
Trust covered by family trust election
(3) The trust in respect of which the family trust election was made is a member of the primary individual’s family group in relation to the conferral or distribution.
Trust with same primary individual
(3A) A trust with the same primary individual specified in its family trust election is a member of the primary individual’s family group in relation to the conferral or distribution.
Entity covered by interposed entity election
(4) A company, partnership or trust is a member of the primary individual’s family group in relation to the conferral or distribution if:
(a) the company, partners or trustee has made an interposed entity election to that effect; and
(b) the election is in force when the conferral takes place or the distribution is made.
Entity owned by family
(5) A company, partnership or trust is a member of the primary individual’s family group in relation to the conferral or distribution if, when the conferral takes place or the distribution is made:
(a) the primary individual; or
(b) one or more members of the primary individual’s family; or
(c) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts;
or any combination of the above, have fixed entitlements directly or indirectly, and for their own benefit, to all of the income and capital of the company, partnership or trust.
Funds
(6) A fund, authority or institution in Australia that is mentioned in item 1 or 2 of the table in section 30‑15 of the Income Tax Assessment Act 1997 is a member of the primary individual’s family group in relation to the conferral or distribution if, assuming that a deduction were allowable under Division 30 of that Act in respect of the conferral or distribution, section 78A of this Act would not prevent any of the deduction being allowable.
Certain tax exempt bodies
(7) An institution, hospital, trustee, society, association, club, or fund, all of whose income is exempt under:
(a) section 50‑5 or 50‑10 of the Income Tax Assessment Act 1997; or
(b) item 6.1 or 6.2 of the table in section 50‑30, or item 9.1 or 9.2 of the table in section 50‑45, of the Income Tax Assessment Act 1997;
is a member of the primary individual’s family group in relation to the conferral or distribution if, assuming that a deduction were allowable under Division 30 of that Act in respect of the conferral or distribution, section 78A of this Act would not prevent any of the deduction being allowable.
Institutions etc. where no living beneficiaries
(8) Either:
(a) an institution all of whose income is exempt under item 1.1, 1.3 or 1.4 of the table in section 50‑5 of the Income Tax Assessment Act 1997; or
(b) a fund, authority or institution in Australia that is mentioned in item 1 or 2 of the table in section 30‑15 of the Income Tax Assessment Act 1997;
is a member of the primary individual’s family group in relation to the conferral or distribution if, when the conferral takes place or the distribution is made, all of the beneficiaries of the trust, in respect of which the family trust election was made, who were individuals have died.
Estate of deceased family
(9) If the primary individual and all of the members of his or her family are dead when the conferral takes place or the distribution is made, the estates of the individual and of the members are members of the primary individual’s family group in relation to the conferral or distribution.
272‑95 Family
(1) The family of an individual (the test individual) consists of the test individual and all of the following (if applicable):
(a) any parent, grandparent, brother or sister of the test individual or the test individual’s spouse;
(b) any nephew, niece or child of the test individual or the test individual’s spouse;
(c) any lineal descendant of a nephew, niece or child referred to in paragraph (b);
(d) the spouse of the test individual or of anyone who is a member of the test individual’s family because of paragraphs (a), (b) and (c).
Note 1: Child, parent and spouse are defined in subsection 6(1).
Note 2: Section 960‑255 may be relevant to determining relationships for the purposes of paragraph (1)(a).
(2) A person does not cease to be a family member merely because of the death of any other family member.
(3) In this section, an adopted child, step‑child or ex‑nuptial child of a person is taken to be a lineal descendant of that person for the purposes of determining the lineal descendants of that person or any other person.
Note: A person who is no longer a member of an individual’s family under this section may still be a member of the individual’s family group under subsection 272‑90(2A).
Subdivision 272‑E—Excepted trust
272‑100 Excepted trust
A trust is an excepted trust at a particular time if:
(a) it is a family trust at the particular time; or
(b) it is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust in relation to the income year in which the particular time occurs; or
(c) it is the trust of a deceased estate, where the particular time occurs during the period from the death of the individual until the end of the year of income in which the 5th anniversary of the death occurs; or
(d) at the particular time it is a fixed trust that is a unit trust, and exempt entities have fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the trust; or