The Commissioner announced a one-off opportunity for entities that have acted as if they were a family entity, to specify a year of income up to 2003 in relation to a family trust election and an interposed entity election.
We have released a Practice Statement PS LA 2004/1 (GA) in relation to the announcement.
An entity will have acted as if it was a family entity if:
- the entity passed the family control test at all times from the beginning of the specified income year until 30 June 2004
- all income and capital distributions made by the entity for the period from the start of the specified year until 30 June 2004 have been made to the specified individual or members of the specified individual's family group.
Yes. The opportunity applies to an interposed entity election provided that the interposed entity has acted as if it was a family entity. The entity will satisfy this requirement if at all times from the beginning of the specified income year until 30 June 2004:
- the entity passes the family control test
- the entity has made no distributions of income or capital to a person other than
- the individual specified in the family trust election with which the interposed entity election relates
- members of that individual's family group.
The earliest year you can specify depends on the purpose for which you are making the family trust election. Providing the necessary conditions are satisfied from the start of the specified income year until 30 June 2004:
- for trust loss purposes, you can specify 1995 to 2003 income years
- for company loss tracing purposes, you can specify 1997 to 2003 income years
- for franking credit trading purposes, you can specify 1998 to 2003 income years.
The earliest year able to be specified for an interposed entity election depends on the specified year of the family trust election. An interposed entity election can not have an earlier specified year than the related family trust election.
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- The procedures do not require tax practitioners or taxpayers to obtain copies of earlier year election forms.
- Entities taking advantage of this opportunity will be required to make certain declarations when doing so.
- Entities have until 31 May 2010 to lodge the paperwork in accordance with the procedures.
- Entities not required to lodge a return for the 2004 income tax year will have until 31 May 2010 to provide details of the election together with the relevant declaration relating to this opportunity.
- Entities who have already lodged income tax returns for 2004 will have until 31 May 2010 to lodge a one-off opportunity declaration form together with a 2004 family trust election or 2004 interposed entity election.
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No. The trust no longer exists and consequently no one exists in the capacity of trustee to make the declaration.
No. You can only ask us to treat the election already lodged as applying from an earlier specified income year providing the necessary conditions are satisfied, at all times, from the start of that earlier income year until 30 June 2004. Under the one-off opportunity you cannot change any other details on a previously lodged election or lodge a replacement election.
You can ask us to treat the election already lodged as applying from an earlier specified income year (the year depends on the purpose for making the election) provided that, at all times, from the beginning of the specified income year until 30 June 2004:
- the entity passes the family control test
- no distributions have been made outside the family group.
No, unless the revocation can be made in accordance with subsection 272-80(6) of Schedule 2F to the Income Tax Assessment Act 1936.
Entities who have already lodged their 2004 income tax return will have until 31 May 2010 to lodge a 2004 family trust election and/or 2004 interposed entity election together with a one-off opportunity declaration and request form.
Entities who have not yet lodged their 2004 income tax return should provide the paperwork, in accordance with the procedures, when they lodge their return.
Entities not required to lodge a 2004 return will be required to provide details of the election and declaration relating to this opportunity by 31 May 2010.
Section 272-87 of Schedule 2F to the Income Tax Assessment Act 1936 outlines how an entity passes the family control test.
For a trust this generally requires that, when making a family trust election or an interposed entity election, a trust must pass the family control test at a particular time - that is, certain persons must control the trust at that time. Those persons are some or all of the individuals specified in the relevant family trust election, members of the specified individual's family and a professional legal or financial adviser to the family.
It is similar in its operation but it is a different test. A trust cannot make a family trust election unless it is controlled by the relevant family from the time the election comes into effect. The non-fixed trust loss test (Section 269-95 of Schedule 2F to the Income Tax Assessment Act 1936) looks at any change in the group controlling a non-fixed trust.
Subdivision 272-B of Schedule 2F to the Income Tax Assessment Act 1936 defines what a distribution is and Division 271 sets out when a distribution is made outside a family group.
Yes, provided that the individual was alive;
- in the year in which the election under PS LA 2004/1 (GA) treats it as having been made, and
- at the time the election should have originally been made under section 272-80 of Schedule 2F to the Income Tax Assessment Act 1936 or the relevant transitional provision.
Example:
An election made and lodged under PS LA 2004/1 (GA) with a request to treat that election as applying from the 1996 income year would require the individual specified to have been alive at all times during the 1996 income year and up until at least the time when the 1998 income tax return was lodged.
No. The date of birth of the individual specified in the family trust election must be earlier than or equal to the election commencement time for the family trust election.
Example:
An election made and lodged under PS LA 2004/1 (GA) with a request to treat that election as applying from the 1996 income year would require the specified individual's date of birth to be no later than 1 July 1995.
Tax agents will need to review their clients' circumstances to identify which clients have not lodged FTEs and IEEs but require them, and determine if they satisfy the conditions to enable an earlier income year to be specified.
Yes, entities will have until 31 May 2010 to lodge 2004 elections and the one-off opportunity declaration forms even where the entity has already lodged its 2004 income tax return.
You should be able to determine if an election was lodged from your own records. However, if you cannot do this you can ask for this information by:
- checking the tax agent portal
- phoning 13 28 66
- writing to:
Australian Taxation Office
PO Box 1130
Penrith NSW 2740
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You will need to include your tax file number (TFN) or Australian business number (ABN).
You should only request this information if you have identified that you need to make a FTE or an IEE.
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You should be able to determine if an election was lodged from your clients' or your own records. However, if you cannot do this you can ask for this information by:
- checking the tax agent portal
- phoning 13 72 86 FKC 213. - depending on the volume of information sought, you may be asked to fax your request
- writing to:
Australian Taxation Office
PO Box 1130
Penrith NSW 2740
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You will need to include your tax agent number and your client's TFN or ABN.
You should only request this information if you have identified that your client needs to make a FTE or an IEE.
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No. You will be able to determine if an election was lodged from your own records. However, if you cannot do this you should check the tax agent portal or request the information from us.
As a general rule, amendments will only be possible where the statutory period of amendment has not expired.
Last Modified: Monday, 22 February 2010