The Interposed entity election or revocation 2021 (NAT 2788-6.2021) is available in Portable Document Format (PDF).
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When to use the Interposed entity election or revocation 2021
The trustees, company or partners must use the Interposed entity election or revocation 2021 for:
- making an interposed entity election in accordance with section 272-85 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) specifying a day in 2004–05 or a later year, or
- revoking an interposed entity election effective from 2020–21 in accordance with subsections 272-85(5A), (5C) and (6) of Schedule 2F to the ITAA 1936.
If you wish to revoke an interposed entity election, use the Interposed entity election or revocation 2021 only for 2020–21.
Conditions for making an interposed entity election
Where specifying 2020–21
To make an interposed entity election specifying a day in 2020–21, the trust (including fund), company or partnership must pass the family control test in section 272-87 of Schedule 2F to the ITAA 1936 at the end of that year; see subsection 272-85(4) of Schedule 2F to the ITAA 1936. However, the interposed entity election will only be in force from the election commencement time, being the later of the specified day and the earliest time in 2020–21 from which the trust (including fund), company or partnership passes the family control test continuously until the end of that year; see subsection 272-85(6B) of Schedule 2F to the ITAA 1936.
The trustees, company or partners can make an interposed entity election in accordance with section 272-85 of Schedule 2F to the ITAA 1936 that the trust (including fund), company or partnership be included in the family group of the individual specified in a family trust election in respect of more than one trust, provided the individual specified in each family trust election is the same. See subsection 272-85(7) of Schedule 2F to the ITAA 1936. They must complete a separate Interposed entity election or revocation 2021 for each interposed entity election specifying a day in 2020–21.
Where specifying 2004–05 or later years
For 2004–05 and later years, the trustees, a company or partners can make interposed entity elections specifying an earlier year provided certain conditions are met. Generally, these conditions require that from the beginning of the specified year until 30 June of the year immediately preceding the one in which the election is made:
- the company, partnership or trust (including fund) passes the family control test in section 272-87 of Schedule 2F to the ITAA 1936, and
- any conferrals of present entitlement to, or any actual distributions of, income or capital of the trust during that period have been made on or to the individual specified in the family trust election by reference to which the interposed entity election is made or members of that individual’s family group; see subsection 272-85(4A) of Schedule 2F to the ITAA 1936.
As subsection 272-85(4A) of Schedule 2F to the ITAA 1936 applies to elections specifying a year before the year in which the election is made, trustees, companies and partners using the Interposed entity election or revocation 2021 to make an interposed entity election can specify 2004–05 or later, provided the above conditions are met.
Conditions for revoking an interposed entity election
Under legislative changes that took effect on 1 July 2007, an interposed entity election can be revoked in certain limited circumstances. See subsection 272-85(5A) of Schedule 2F to the ITAA 1936. Generally, an interposed entity election can be revoked if, at the election commencement time, the interposed entity was, or at a later time it becomes, a member of the family group of the individual specified in the family trust election. This may occur where the interposed entity:
- is a trust and has made a family trust election with the same specified individual as the family trust in respect of which the interposed entity election was made. In accordance with subsection 272-90(3A) of Schedule 2F to the ITAA 1936, family trusts with the same specified individual will be members of each other’s family group without having to make interposed entity elections in respect of each other, or
- is, or becomes, wholly owned by members of the family of the individual specified in the family trust election in accordance with subsection 272-90(5) of Schedule 2F to the ITAA 1936, and therefore is a member of the family group without the need for an interposed entity election.
How to complete the Interposed entity election or revocation 2021
Write the tax file number (TFN) of the trust, fund, company or partnership in the space provided.
All trusts, funds, companies or partnerships using the Interposed entity election or revocation 2021 must complete items 1, 2 and 4, and item 3 if it applies.
If the trustees, company or partners are making an interposed entity election specifying 2004–05 or a later year, complete section A. The trustees, company or partners must provide all the information required in section A for an interposed entity election specifying a day in 2004–05 or a later year to be made in accordance with section 272-85 of Schedule 2F to the ITAA 1936.
When making an interposed entity election, make sure you write either 2005 or a later income year (as appropriate) in the Income year specified box at item 7 of section A.
If the trustees, company or partners are revoking an interposed entity election, and the revocation will be effective from 2020–21, complete section B. The trustees, company or partners must provide all the information required in section B for an interposed entity election to be revoked in accordance with subsections 272-85(5A), (5C) and (6) of Schedule 2F to the ITAA 1936.
Although it is not an offence not to quote a TFN, any TFN required on this form is information which the Commissioner requires within the meaning of subsection 272-85(3) of Schedule 2F to the ITAA 1936. If the TFN of a person or entity is required on the Interposed entity election or revocation 2021 and the relevant person or entity does not have a TFN, print X in the box provided.
Where the Interposed entity election or revocation 2021 is being used to make an interposed entity election, every trustee of the trust (including fund), the company’s public officer or every partner of the partnership (as applicable) must sign and date the form at the time the interposed entity election is made. If a trustee or partner is a company, the company’s public officer must sign for that corporate trustee or partner.
Where the Interposed entity election or revocation 2021 is used to revoke an interposed entity election, every trustee of the trust (including fund), the company’s public officer or every partner of the partnership must sign and date the form at the time:
- the 2021 tax return for the trust, fund, company or partnership is lodged with this form, or
- the Interposed entity election or revocation 2021 must be given to the Commissioner.
If a trustee or partner is a company, the company’s public officer must sign for that corporate trustee or partner.
How to make or revoke an interposed entity election
To make an interposed entity election, complete the Interposed entity election or revocation 2021 and send it to the address below.
To revoke an interposed entity election where the 2021 tax return for the trust, fund, company or partnership is required, complete the Interposed entity election or revocation 2021. This must be included as part of the tax return and sent to the address below.
To revoke an interposed entity election where the 2021 tax return for the trust, fund, company or partnership is not required, complete the Interposed entity election or revocation 2021. You must send it to the address below no later than two months after the end of 2020–21 for the trust, fund, company or partnership.
If you need more time to revoke the election, with or without the 2021 tax return, write to the Commissioner before the due date requesting an extension of time, stating the reasons for the delay and the proposed date for lodging the form and/or tax return.
Send your completed form and/or tax return to:
Australian Taxation Office
GPO Box 9845
[insert the name and postcode of your nearest capital city]
For example:
Australian Taxation Office
GPO Box 9845
SYDNEY NSW 2001