Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 266 - Income tax consequences for fixed trusts of abnormal trading or change in ownership  

Subdivision 266-B - Effect of change in ownership of fixed trust  

SECTION 266-45   THE TRUST MUST MEET NON-FIXED TRUST STAKE TEST  

266-45(1)    
If the condition in section 266-40 is not met, the trust must satisfy the conditions in this section.

First condition

266-45(2)    
At all times during the test period:

(a) non-fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the trust; or

(b) both:

(i) a fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, all of the fixed entitlements to income and capital of the trust; and

(ii) non-fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.

Second condition

266-45(3)    
The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:

(a) in a paragraph (2)(a) case - the trust; or

(b) in a paragraph (2)(b) case - the holding entity;

at the beginning of the test period must have held those entitlements to those shares at all times during the test period.

Third condition

266-45(4)    
At the beginning of the test period:

(a) individuals must not have had more than a 50% stake in the income of the trust; or

(b) individuals must not have had more than a 50% stake in the capital of the trust.

Fourth condition

266-45(5)    
It must be the case that, for each non-fixed trust (other than an excepted trust) that, at any time in the test period, held directly or indirectly a fixed entitlement to a share of the income or capital of the trust:

(a) if this section is being applied for the purposes of section 266-25 - section 267-20 would not have prevented the non-fixed trust from deducting the tax loss concerned if it, rather than the fixed trust, had incurred the loss; or

(b) if this section is being applied for the purposes of section 266-30 - section 267-60 does not require the non-fixed trust to work out its net income and tax loss for the income year under Division 268 ; or

(c) if this section is being applied for the purposes of section 266-35 - section 267-25 , or section 267-65 , as the case requires, would not have prevented the non-fixed trust from deducting the amount concerned if it, rather than the fixed trust, would otherwise be entitled to deduct the amount.