Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 1 - Preliminary  

SECTION 328   NON-RESIDENT FAMILY TRUSTS  

328(1)   [ Conditions for non-resident family trust]  

Subject to subsections (4) and (5), for the purposes of this Part, a trust is a non-resident family trust in relation to a natural person at a particular time if, and only if, at that time:

(a) the trust is either:

(i) a post-marital or post-relationship family trust in relation to the natural person; or

(ii) a family relief trust in relation to the natural person; and

(b) the trust is constituted by:

(i) a deed of trust or other instrument; or

(ii) an order or declaration of a court.

328(2)   [ Post-marital family trust]  

For the purposes of this section, a trust is a post-marital or post-relationship family trust in relation to a natural person at a particular time if:

(a) either of the following conditions is satisfied:

(i) the trust was created pursuant to:

(A) a decree or order of dissolution or annulment of marriage, being a dissolution or annulment that, because of the Family Law Act 1975 , has effect, or continues to have effect in Australia or is recognised as valid in Australia; or

(B) a decree or order of judicial separation or a similar decree or order;

(ii) the trust was created in consequence of the break-down of a de facto relationship; and

(b) at that time, the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the " primary potential beneficiaries " ) are natural persons who:

(i) are not Part X Australian residents at that time; and

(ii) are covered by any of the following categories:

(A) the spouse or former spouse of the natural person;

(B) a child of the natural person;

(C) a child of the former spouse of the natural person, being a child who was such a child at a time when the former spouse was the spouse of the natural person;

(D) a child of the spouse of the natural person.

328(3)   [ Family relief trust]  

For the purposes of this section, a trust is a family relief trust in relation to a natural person at a particular time (in this subsection called the " test time " ) if:

(a) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the " primary potential beneficiaries " ) are natural persons who:

(i) are identified by name in the trust deed or instrument, or in the court order or declaration, constituting the trust; and

(ii) are not Part X Australian residents at that time; and

(iii) are covered by any of the following categories:

(A) the spouse or former spouse of the natural person;

(B) a parent of the natural person or of the natural person's spouse or former spouse;

(C) a child of the natural person or of the natural person's spouse or former spouse;

(D) a grandparent of the natural person;

(E) a grandchild of the natural person;

(F) a brother or sister of the natural person or of the natural person's spouse or former spouse;

(G) a child of a brother or sister mentioned in sub-subparagraph (F); and

(b) the trust was established, and is operated, for the relief of persons who are in necessitous circumstances; and

(c) any of the following conditions is satisfied:

(i) at the test time, the assets of the trust are not excessive having regard to the requirements, or likely requirements, of the primary potential beneficiaries;

(ii) no transfers of property or services to the trust were made during the period (in this paragraph called the " test period " ) commencing at the IP time and ending at the test time;

(iii) immediately after each transfer of property or services to the trust made during the test period, the assets of the trust were not excessive having regard to the requirements, or likely requirements, of the beneficiaries at the time of the transfer.

Note:

Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining relationships for the purposes of subparagraph (3)(a)(iii).

328(4)   [ Death of primary potential beneficiary]  

Subsection (1) does not prevent a trust from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of a particular primary potential beneficiary at that time one or more natural persons (which persons are in subsection (5) called the " secondary potential beneficiaries " ) who:

(a) are not Part X Australian residents at that time; and

(b) are children of the primary potential beneficiary;

would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.

328(5)   [ Death of primary and secondary potential beneficiaries]  

Subsections (1) and (4) do not prevent a trust from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of all of the primary potential beneficiaries and all of the secondary potential beneficiaries at that time, there are one or more deductible gift recipients covered by an item in any of the tables in Subdivision 30-B of the Income Tax Assessment Act 1997 , or item 2 of the table in section 30-15 of that Act, that would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.

328(6)   [ Entity benefiting under the trust]  

For the purposes of this section, if, at a particular time, an entity holds an interest in, or right to benefit under, a trust that is dependent on the death of one or more natural persons, then, the entity is taken to be an entity who, in the event of the death of that natural person or those natural persons immediately after that time, would benefit under the trust.

328(7)   [ Reference to natural person]  

A reference in this section to a natural person does not include a reference to a natural person in the capacity of a trustee.