Taxation Administration Act 1953

SCHEDULE 1 - COLLECTION AND RECOVERY OF INCOME TAX AND OTHER LIABILITIES  

Note: See section 3AA .

Chapter 2 - Collection, recovery and administration of income tax  

PART 2-10 - PAY AS YOU GO (PAYG) INSTALMENTS  

Division 45 - Instalment payments  

Subdivision 45-I - Trust income included in instalment income of beneficiary  

SECTION 45-287   WHEN TRUSTS ARE DISQUALIFIED DUE TO CONCENTRATED OWNERSHIP  

Concentrated ownership

45-287(1)    
This section applies to a trust if an individual holds, or up to 20 individuals hold between them directly or indirectly and for their own benefit, interests in the trust:

(a) carrying *fixed entitlements to:

(i) at least 75% of the trust ' s income; or

(ii) at least 75% of the trust ' s capital; or

(b) if beneficiaries of the trust have a right to vote in respect of activities of the trust - carrying at least 75% of those voting rights.

Single individual

45-287(2)    
Subsection (1) operates as if all of these were a single individual:

(a) an individual, whether or not the individual holds interests in the trust; and

(b) the individual ' s *associates; and

(c) for any interests in respect of which other individuals are nominees of the individual or of the individual ' s associates - those other individuals.

Concentrated ownership - potential due to possible variation of rights etc.

45-287(3)    
This section also applies to a trust if, because of:

(a) any provision in the trust ' s constituent document, or in any contract, agreement or instrument:

(i) authorising the variation or abrogation of rights attaching to any of the interests in the trust; or

(ii) relating to the conversion, cancellation, extinguishment or redemption of any of those interests; or

(b) any contract, *arrangement, option or instrument under which a person has power to acquire any of those interests; or

(c) any power, authority or discretion in a person in relation to the rights attaching to any of those interests;

it is reasonable to conclude that the rights attaching to any of the interests are capable of being varied or abrogated in such a way (even if they are not in fact varied or abrogated in that way) that, directly or indirectly, the trust would be disqualified under subsection (1).

Tracing

45-287(4)    
In applying this section:

(a) if a *complying superannuation fund, *approved deposit fund or *superannuation fund for foreign residents has more than 50 members and has, directly or indirectly, a *fixed entitlement to any of the trust ' s income or capital - that entitlement is taken to be held by more than 20 individuals for their own benefit; and

(b) if a complying superannuation fund, approved deposit fund or superannuation fund for foreign residents has 50 or fewer members and has, directly or indirectly, a fixed entitlement to any of the trust ' s income or capital - each of the members is taken to have a share of that entitlement, in equal proportions, for his or her own benefit.