Which tests to apply

In using a tax loss or claiming a debt deduction, a trust needs to consider all the tests that apply to that type of trust, as shown in the following table.

Types of trusts and tests to apply

Type of trust	50% stake test	Business continuity test	Pattern of distributions test	Control test	Income injection test
Non-fixed trust
Listed widely held trust
Unlisted widely held trust
Unlisted very widely held trust
Wholesale widely held trust
Fixed trust other than a widely held unit trust
Excepted trusts
Family trust
Excepted trust (other than a family trust)

Table notes:

• For non-fixed trusts    
  • the 50% stake test only applies where, at any time in the test period, individuals have more than a 50% stake in the income or capital (or both) of the trust
  • the pattern of distributions test does not apply for current year loss purposes.
   
• For listed widely held trusts, the business continuity test can be applied if a listed widely held trust fails the 50% stake test.
• For fixed trusts other than a widely held unit trust, an alternative version to the 50% stake test is also available in certain cases where non-fixed trusts hold fixed entitlements in the fixed trust (section 266-45 of Schedule 2F).
• For family trusts, the income injection test does not apply where entities and individuals within a family group inject income into a family trust with tax losses or other deductions.
• Excepted trusts, other than family trusts include:    
  • complying super funds
  • deceased estates within a five-year administration period
  • unit trusts that are a fixed trust where all the unit holders are exempt from income tax.
   

See also:

• Schedule 2F – Trust Losses and Other Deductions (ITAA 1936)

Find out about:

• How to apply the trust loss tests