• Which tests to apply

    In using a tax loss or claiming a debt deduction, a trust needs to consider all the tests that apply to that type of trust, as shown in the following table:

    Type of trust

    50% stake test

    Same business test

    Pattern of distributions test

    Control test

    Income injection test

    Non-fixed trust

    (1)

     

    (4)

    Fixed trusts

     

     

     

     

     

    Listed widely held trust

    (3)

     

     

    Unlisted widely held trust

     

     

     

    Unlisted very widely held trust

     

     

     

    Wholesale widely held trust

     

     

     

    Fixed trust other than a widely held unit trust

    (2)

     

     

     

    Excepted trusts

     

     

     

     

     

    Family trust

     

     

     

     

    (5)

    Excepted trust (other than a family trust) (6)

     

     

     

     

     

    (1) The 50% stake test only applies to a non-fixed trust where, at any time in the test period, individuals have more than a 50% stake in the income or capital (or both) of the trust.

    (2) An alternative version is also available in certain cases where non-fixed trusts hold fixed entitlements in the fixed trust (section 266-45 of Schedule 2F).

    (3) This test can be applied if the 50% stake test is failed by a listed widely held trust.

    (4) This test does not apply for current-year loss purposes.

    (5) The income injection test does not apply where entities and individuals within a family group inject income into a family trust with tax losses or other deductions.

    (6) Excepted trusts other than family trusts include:

    • complying superannuation funds
    • deceased estates within a five year administration period
    • unit trusts that are a fixed trust where all the unit holders are exempt from income tax.
      Last modified: 22 Apr 2016QC 18663