The Tax Laws Amendment (2007 Measures No. 4) Act 2007 amended Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) to:
- allow interposed entity elections to be revoked where the election was made for an entity that was already included in the family group of the individual specified in the family trust election at the election commencement time. An interposed entity election may also be revoked at a later time where the entity becomes wholly owned by members of the family group. If an interposed entity election is revoked you need to complete an Interposed entity election or revocation 2012 and attach it to the trust's tax return
- broaden the definition of 'family' to include lineal descendants of a nephew, niece, or child of the test individual or the test individual's spouse
- ensure that the death of a family member does not by itself result in another family member ceasing to be a member of the family
- exempt distributions made to former spouses, former widows/widowers and former stepchildren from family trust distribution tax by including them within the definition of 'family group'
- allow family trust elections to be revoked if the family trust is a fixed trust or if the family trust election was not required for utilisation of tax losses, bad debt deductions or accessing franking credits
- permit family trusts that have made a family trust election in respect of the same test individual to be included in each other's 'family group' and not treated as an 'outsider to the trust' for the purposes of the income injection test
- allow the test individual specified in a family trust election to be changed only once, where the new test individual was a member of the original test individual's family, provided that no conferrals of present entitlement to (or distributions of) income or capital of the family trust (or an interposed entity) have been made outside the new test individual's family group.