Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 271 - Family trust distribution tax  

SECTION 271-65   TAX LIABILITY WHERE NON-RESIDENT INTERPOSED ENTITY ' S TAX UNPAID  

When section applies

271-65(1)    
This section applies if:

(a) a company, the partners in a partnership or the trustee of a trust makes an interposed entity election to be included in the family group of an individual (the primary individual ); and

(b) while the interposed entity election is in force, the company, partnership or trust (the primary interposed entity ) confers a present entitlement to, or distributes, income or capital; and

(c) family trust distribution tax becomes due and payable on the amount or value of the income or capital.

Determination about unpaid tax

271-65(2)    
If:

(a) the Commissioner determines, in writing, at or after the time when the tax became due and payable, that it is unlikely that the whole or part (the unpaid amount ) of the tax will be paid; and

(b) at the time:

(i) if the primary interposed entity is a company - the company is a non-resident; and

(ii) if the primary interposed entity is a partnership - a partner is a non-resident; and

(iii) if the primary interposed entity is a trust - either a trustee is a non-resident or the central management and control of the trust is outside Australia;

then the consequences in subsection (3) result.

Consequences

271-65(3)    
The consequences are:

(a) if there is only one person covered by subsection (4) - that person is liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount; and

(b) if there are 2 or more persons covered by subsection (4) - those persons are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount.

Persons covered

271-65(4)    
The persons covered by this subsection are:

(a) any company to which subsection (5) applies; and

(b) any person who is a director of such a company when the determination is made; and

(c) any partner in a partnership to which subsection (5) applies; and

(d) if any partner in any such partnership is a company - any person who is a director of the company when the determination is made; and

(e) the trustee of any trust to which subsection (5) applies; and

(f) if the trustee of any such trust is a company - any person who is a director of the company when the determination is made.

Entities making election and distribution etc.

271-65(5)    
This subsection applies to any company, partnership or trust (an entity ), other than the primary interposed entity, meeting the following conditions:

(a) the company, the partners in the partnership or the trustee of the trust made:

(i) an interposed entity election to be included in the family group of the primary individual; or

(ii) a family trust election specifying the primary individual; and

(b) while that election and the interposed entity election made in respect of the primary interposed entity were in force, and before the Commissioner made the determination mentioned in paragraph (2)(a), the entity conferred a present entitlement to, or distributed, income or capital upon or to an eligible entity (see subsection (6)).

Eligible entities

271-65(6)    
Each of the following is an eligible entity :

(a) the primary interposed entity;

(b) a company in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where the company was a non-resident, and the election was in force, when the conferral or distribution took place;

(c) a partnership in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where any of the partners was a non-resident, and the election was in force, when the conferral or distribution took place;

(d) a trust:

(i) in respect of which an interposed entity election had been made to be included in the family group of the primary individual; or

(ii) in respect of which a family trust election had been made specifying the primary individual;

where, when the conferral or distribution took place, the election was in force and either a trustee was a non-resident or the trust ' s central management and control were outside Australia.