Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 272 - Interpretation  

Subdivision 272-D - Family trust etc.  

SECTION 272-87   PASSING THE FAMILY CONTROL TEST  

Trusts

272-87(1)    
A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if:

(a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of:

(i) the individual (the primary individual ) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or

(ii) one or more members of the primary individual ' s family (see section 272-95 ); or

(iii) the primary individual and one or more members of the primary individual ' s family; or

(b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual ' s family; or

(c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of:

(i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or

(ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii).

Requirement for purposes of subsection (1)

272-87(2)    
The requirement for the purposes of subsection (1) is that:

(a) the group has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust; or

(b) the group is able (directly or indirectly) to control the application of the capital or income of the trust; or

(c) the group is capable, under a scheme, of gaining the beneficial enjoyment in paragraph (a) or the control in paragraph (b); or

(d) the trustee of the trust is accustomed, under an obligation or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the group; or

(e) the group is able to remove or appoint the trustee of the trust; or

(f) the group has more than a 50% stake in the income or capital of the trust; or

(g) persons in the group are the only persons who, under the terms of the trust, can obtain the beneficial enjoyment of the income and capital of the trust.

Companies and partnerships

272-87(3)    

A company or partnership in respect of which an interposed entity election is proposed to be made passes the family control test if a group consisting of:

(a) the individual who is specified in the family trust election mentioned in subsection 272-85 (1) in relation to the interposed entity election; or

(b) one or more members of the individual ' s family (see section 272-95 ); or

(c) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or

(d) any persons covered by any combination of the above paragraphs;

have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income or a greater than 50% share of the capital of the company or partnership.