Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 270 - Schemes to take advantage of deductions  

SECTION 270-10   SCHEMES TO TAKE ADVANTAGE OF DEDUCTIONS  

Basic case

270-10(1)    
The consequences set out in section 270-15 result if:

(a) a deduction is allowable to a trust for the income year; and

(b) under a scheme, the following happen (in any order):

(i) the trust derives an amount of assessable income (the scheme assessable income ) in the income year; and

(ii) an outsider to the trust (see section 270-25 ) directly or indirectly provides a benefit (see section 270-20 ) to the trustee, to a beneficiary in the trust or to an associate of the trustee or of a beneficiary; and

Note:

The benefit may constitute all or any of the scheme assessable income.

(iii) the trustee, a beneficiary in the trust or an associate of the trustee or of a beneficiary, directly or indirectly provides a benefit to the outsider to the trust or to an associate of the outsider (other than an associate covered by any of paragraphs 270-25(1)(a) to (f)); and

Note:

The benefit may constitute all or any of the deduction.

(c) it is reasonable to conclude that:

(i) the trust derived the scheme assessable income; or

(ii) the outsider provided the benefit as mentioned in subparagraph (b)(ii); or

(iii) the trustee, beneficiary or associate provided the benefit as mentioned in subparagraph (b)(iii);

wholly or partly, but not merely incidentally, because the deduction would be allowable; and

(d) the trust is not an excepted trust under paragraph 272-100(b), (c) or (d) .

Special case

270-10(2)    
If:

(a) under a scheme, a person who, before the scheme was entered into, was an outsider to a trust becomes:

(i) the trustee of the trust; or

(ii) a person with a fixed entitlement to a share of the income or capital of the trust; and

(b) if the person had not ceased to be an outsider to the trust, the requirements of subsection (1) would have been satisfied in relation to the scheme;

the requirements of subsection (1) are taken to have been satisfied in relation to the scheme.