Tax Laws Amendment (2007 Measures No. 4) Act 2007 (143 of 2007)

Schedule 8   Family trusts

Income Tax Assessment Act 1936

3   After subsection 272-80(6) in Schedule 2F

Insert:

(6A) The trustee of a trust may, in respect of an income year during the period specified in subsection (6B), revoke the election unless:

(a) the trust, or another entity, has incurred a tax loss and had its assessable income reduced by part or all of the loss in an income year or years during the period:

(i) starting at the beginning of the income year specified in the election; and

(ii) finishing at the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8));

and the trust, or the other entity, could not have had its assessable income so reduced had the election not been in force; or

(b) the trust, or another entity, has claimed a deduction for bad debts in an income year or years during the period specified in paragraph (a) and the trust, or the other entity, could not have claimed the deduction had the election not been in force; or

(c) a beneficiary of the trust in an income year during the period specified in paragraph (a) received a franked distribution indirectly through the trust and paragraph 207-150(1)(a) of the Income Tax Assessment Act 1997 would have applied in relation to the distribution had the election not been in force.

Period to vary or revoke the election

(6B) The trustee of a trust cannot vary or revoke the election under subsections (5A) or (6A) unless the variation or revocation is in respect of an income year that occurs during the period:

(a) starting at the beginning of the income year specified in the election and finishing at the end of the fourth income year after the income year specified in the election; or

(b) starting at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year.

Note: The heading to subsection 272-80(6) is altered by omitting "case" and substituting "cases".