Interposed entity election status

You must complete this item if any of the following apply:

• The partners are making one or more interposed entity elections specifying a day in the 2004-05 or later income year in accordance with section 272-85 of Schedule 2F to the ITAA 1936.
• The partners have previously made one or more interposed entity elections specifying a day in any income years from 1994-95 to 2010-11 in accordance with section 272-85 of Schedule 2F to the ITAA 1936 and, if applicable, items 23 or 23A of Schedule 1 to the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 and at least one interposed entity election has not been revoked in an income year before the 2011-12 income year in accordance with subsections 272-85(5) and 272-85(6) of Schedule 2F to the ITAA 1936.
• The partners are revoking, from a time in the 2011-12 income year, one or more previously made interposed entity elections in accordance with section 272-85 of Schedule 2F to the ITAA 1936.

A partner cannot make an interposed entity election specifying a year earlier than the 2004-05 income year (section 272-85 of Schedule 2F to the ITAA 1936). Do not attach election forms for an interposed entity election made specifying an income year before the 2004-05 income year to the Partnership tax return 2012.

Amendments to Schedule 2F to the ITAA 1936 in the Tax Laws Amendment (2007 Measures No. 4) Act 2007 may affect the information you complete at this item. The amendments apply to income years starting on or after 1 July 2007.

Changes to section 272-85 of Schedule 2F to the ITAA 1936 now allow an interposed entity election to be revoked in certain limited circumstances.

The partners cannot revoke an interposed entity election unless the revocation is in respect of an income year that occurs during the period:

• starting on 1 July 2007 and finishing on 30 June 2009.
• starting at the later of
  • the beginning of the income year specified in the election, and
  • 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 the above two dot points.
   

The revocation must be made with the entity's tax return for the income year from which the revocation is to be effective.

For further details on these amendments, see Family trusts - details of amendments to increase flexibility for family trusts.

Instructions on how to complete the Interposed entity election or revocation 2012 are on the form itself.

If the partnership's tax return is not lodged electronically using ELS, and an Interposed entity election or revocation 2012 is being lodged with your partnership's 2012 tax return, send your tax return and the Interposed entity election or revocation 2012, to:

Australian Taxation Office
GPO Box 9845
[insert the name and postcode of your capital city]

For example;

Australian Taxation Office
GPO Box 9845
SYDNEY NSW 2001

If the partners have not made or are not making any interposed entity elections, do not complete this item.

If the partners are making one or more interposed entity elections specifying a day in the 2004-05 or later income year, write the earliest income year specified in the box at this item and complete an Interposed entity election or revocation 2012 for each election specifying a day in the 2004-05 or later income years.

If the partners have previously made one or more elections specifying a day in an income year before the 2011-12 income year, write the earliest income year specified in the box at this item unless the partners are making one or more elections specifying a day in the 2004-05 or later income year.

If the partners have previously made one or more elections specifying a day in an income year before the 2004-05 income year and took advantage of the one-off opportunity in PS LA 2004/1 (GA Lodgment opportunity for family trust and interposed entity elections to specify an earlier year, write the earliest income year specified unless the partners are making one or more elections specifying a day in the 2004-05 or later income years.

Revocation

An interposed entity election can only be revoked by the partners of a partnership that satisfy all the relevant conditions in section 272-85 of Schedule 2F to the ITAA 1936.

Print R in the box at this item if the interposed entity election made by the partners is being revoked from the 2011-12 income year. An Interposed entity election or revocation 2012 must be completed and lodged with their Partnership tax return 2012.

Family trust distribution tax

A consequence of a partnership making an interposed entity election is that under section 271-25 of Schedule 2F to the ITAA 1936 a special tax, called family trust distribution tax (FTDT), is payable at 46.5% on any conferral of present entitlement to, or distribution of, income or capital of the partnership to persons who are not members of the family group of the specified individual within the meaning of section 272-90 of that schedule.

A distribution of income or capital by a partnership is defined in sections 272-55 and 272-60 of Schedule 2F to the ITAA 1936.

Effective from 1 July 2007, the definition of 'family group' was amended to include a former spouse, a former widow or widower, and a former stepchild.

References to these terms are as follows:

• former spouse - was a spouse of either the primary individual or a member of the primary individual's family before a breakdown in the marriage
• former widow or widower - was a widow or widower of either the primary individual or a member of the primary individual's family, and who has a new spouse who is not a member of the primary individual's family
• former stepchild - was a stepchild of either the primary individual or a member of the primary individual's family, before a breakdown in the marriage of the primary individual or the member of the primary individual's family.

Post the Family trust distribution tax payment advice with your FTDT payment to the ATO address:

NSW, ACT or QLD residents

Australian Taxation Office
Locked Bag 1793
PENRITH  NSW  1793

WA, SA, NT, TAS or VIC residents

Australian Taxation Office
Locked Bag 1936
ALBURY  NSW  1936

Make cheques or money orders payable to the Deputy Commissioner of Taxation and print 'Not negotiable' across the cheque. Tender all cheques in Australian currency. Do not send cash by post.