Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 271 - Family trust distribution tax  

SECTION 271-60   TAX LIABILITY WHERE NON-RESIDENT FAMILY TRUST ' S TAX UNPAID  

Conditions for tax liability

271-60(1)    
If:

(a) tax under section 271-15 on the amount or value of income or capital of a family trust becomes due and payable; and

(b) 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

(c) when the Commissioner makes the determination:

(i) a trustee of the family trust is a non-resident; or

(ii) the central management and control of the family trust is outside Australia.

then the consequences set out in subsection (2) result.

Tax liability

271-60(2)    
The consequences are:

(a) if there is only one person covered by subsection (3) - 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 (3) - 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 liable under subsection (2)

271-60(3)    
The persons covered by this subsection are:

(a) the trustee of any trust to which subsection (4) applies; and

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

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

(d) any person who is a director of such a company when the determination is made.

Trust mentioned in paragraph (3)(a)

271-60(4)    

This subsection applies to a trust if the trust would be:

(a) prevented by Division 266 or 267 from deducting a tax loss or amount in respect of a debt; or

(b) required by Division 266 or 267 to work out its net income and tax loss under Division 268 ;

in the income year in which the determination is made, or an earlier income year, if the family trust had not been a family trust.

Company mentioned in paragraph (3)(c)

271-60(5)    

This subsection applies to a company if, in its return of income for the income year in which the determination is made or an earlier income year:

(a) the company deducted an amount in respect of a debt, where it was allowed to do so but, because of former section 63B or 63C , or Subdivision 165-C , 709-D or 719-I of the Income Tax Assessment Act 1997 , it would not have been if the family trust had not been a family trust; or

(b) the company deducted a tax loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165-A of that Act, it would not have been if the family trust had not been a family trust; or

(c) the company applied a net capital loss (within the meaning of former Part IIIA of this Act) where it was allowed to do so but, because of former subsection 160ZC(5), it would not have been if the family trust had not been a family trust; or

(d) the company applied a net capital loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165-CA of that Act, it would not have been if the family trust had not been a family trust;

(e) the company did not calculate its taxable income in accordance with former section 50C of this Act where it was not required to do so but would have been if the family trust had not been a family trust; or

(f) the company calculated its taxable income in accordance with former section 50C and took into account an amount, by reason of former subsection 50D(2), in ascertaining the eligible notional loss of the company under former section 50D, where it was required to calculate its taxable income in accordance with former section 50C and entitled to take the amount into account but would not have been so entitled if the family trust had not been a family trust; or

(g) the company did not calculate its taxable income and tax loss under Subdivision 165-B of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust; or

(h) the company did not calculate its net capital gain and net capital loss under Subdivision 165-CB of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust.