Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 272 - Interpretation  

Subdivision 272-D - Family trust etc.  

SECTION 272-85   INTERPOSED ENTITY ELECTION  

Nature of election

272-85(1)    

Subject to this section, if the trustee makes a family trust election, a company, the partners in any partnership or the trustee of any other trust may make an election (an interposed entity election ) in accordance with this section that the company, partnership or trust is to be included, at all times after a specified day in a specified income year, in the family group of the individual specified in the family trust election.

How election made

272-85(2)    

The election must be in writing and in the approved form.

Election to contain information

272-85(3)    
The election must contain such information as the Commissioner requires.

Family control test must be passed

272-85(4)    
The company, partnership or trust must pass the family control test (see section 272-87 ) at the end of the income year.

Earlier year may be the specified year

272-85(4A)    

The specified income year may be a year before the one in which the election is made if:

(a) at all times in the period from the beginning of the specified income year until 30 June in the income year before the one during which the election is made, the company, partnership or trust passes the family control test (see section 272-87 ); and

(b) either:

(i) any conferrals of present entitlement to income or capital of the trust made by the trustee during that period have been made on; or

(ii) any distributions of income or capital of the trust made by the trustee during that period have been made to;

the individual specified in the family trust election or members of that individual ' s family group.

Election generally cannot be revoked

272-85(5)    

Subject to subsections (5A) and (5B), the election cannot be revoked.

Revocation cases

272-85(5A)    

A company, the partners in any partnership or the trustee of a trust may, in respect of an income year during the period specified in subsection (5C), revoke the election if at the election commencement time, or at a later time, the entity was, or becomes, a member of the family group (within the meaning of subsection 272-90(3A) or (5) ) of the individual specified in the family trust election.

272-85(5B)    

The election is taken to be revoked if the family trust election to which it relates is revoked.

Period to revoke the election

272-85(5C)    

A company, the partners in any partnership or the trustee of a trust cannot revoke an election under subsection (5A) unless the revocation is in respect of an income year that occurs during the period:

(a) beginning at the later of:

(i) the beginning of the income year specified in the election; and

(ii) 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 subparagraph (i) or (ii); or

(b) beginning at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No 4) Act 2007 commenced and finishing at the end of the subsequent income year.

How revocation is made

272-85(6)    

A revocation must be made in the entity ' s return of income for the income year from which the revocation is to be effective. If the entity is not required to give a return for the income year, the revocation must:

(a) be in writing and in the approved form; and

(b) specify the income year from which the revocation is to be effective; and

(c) be given to the Commissioner on or before:

(i) 2 months after the end of that income year; or

(ii) such later day as the Commissioner allows.

When election is in force

272-85(6A)    

The election is in force:

(a) if it is not revoked - at all times after the election commencement time (see subsection (6B)); or

(b) if it is revoked under subsection (5A) - at all times from the election commencement time to the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (6)); or

(c) if the family trust election to which it relates is revoked under subsection 272-80(6) - at all times from the election commencement time until the later time specified in that revocation; or

(d) if the family trust election to which it relates is revoked under subsection 272-80(6A) - at all times from the election commencement time to the end of the income year immediately prior to the income year from which the family trust revocation is to be effective (see subsection 272-80(8) ).

Election commencement time

272-85(6B)    

The election commencement time is:

(a) if the company, partnership or trust does not pass the family control test at all times in the specified income year - the later of:

(i) the beginning of the specified day; and

(ii) the earliest time from which the company, partnership or trust does pass the family control test for the remainder of the specified income year; or

(b) in any other case - the beginning of the specified day.

Restriction on multiple elections

272-85(7)    
The company, partners or trustee must not make an election under this section that the company, partnership or trust is to be included in the family group of the individual specified in the family trust election in respect of more than one trust, unless the individual specified in each of the family trust elections is the same.

272-85(8)    

For the purposes of subsection (7) disregard an election that has been revoked under subsection (5A) or (5B).