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:
(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.