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  • 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.

    Types of trusts and tests to apply

    Type of trust

    50% stake test

    Business continuity test

    Pattern of distributions test

    Control test

    Income injection test

    Non-fixed trust

    Non-fixed trust, yes.

    Non-fixed trust, no.

    Non-fixed trust, yes.

    Non-fixed trust, yes.

    Non-fixed trust, yes.

    Listed widely held trust

    Listed widely held trust, yes.

    Listed widely held trust, yes.

    Unisted widely held trust, no.

    Unisted widely held trust, no.

    Listed widely held trust, yes.

    Unlisted widely held trust

    Unlisted widely held trust, yes.

    Unisted widely held trust, no.

    Unisted widely held trust, no.

    Unisted widely held trust, no.

    Unlisted widely held trust, yes.

    Unlisted very widely held trust

    Unlisted very widely held trust, yes.

    Unisted very widely held trust, no.

    Unisted very widely held trust, no.

    Unisted very widely held trust, no.

    Unlisted very widely held trust, yes.

    Wholesale widely held trust

    Wholesale widely held trust, yes.

    Wholesale widely held trust, no.

    Wholesale widely held trust, no.

    Wholesale widely held trust, no.

    Wholesale widely held trust, yes.

    Fixed trust other than a widely held unit trust

    Fixed trust other than a widely held unit trust, yes.

    Fixed trust other than a widely held unit trust, no.

    Fixed trust other than a widely held unit trust, no.

    Fixed trust other than a widely held unit trust, no.

    Fixed trust other than a widely held unit trust, yes.

    Excepted trusts

    Excepted trusts, no.

    Excepted trusts, no.

    Excepted trusts, no.

    Excepted trusts, no.

    Excepted trusts, no.

    Family trust

    Family trust, no.

    Family trust, no.

    Family trust, no.

    Family trust, no.

    Family trust, yes.

    Excepted trust (other than a family trust)

    Family trust, no.

    Family trust, no.

    Family trust, no.

    Family trust, no.

    Family trust, no.

    Table notes:

    • For non-fixed trusts
      • the 50% stake test only applies 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
      • the pattern of distributions test does not apply for current year loss purposes.
    • For listed widely held trusts, the business continuity test can be applied if a listed widely held trust fails the 50% stake test.
    • For fixed trusts other than a widely held unit trust, an alternative version to the 50% stake test is also available in certain cases where non-fixed trusts hold fixed entitlements in the fixed trust (section 266-45 of Schedule 2F).
    • For family trusts, 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.
    • Excepted trusts, other than family trusts include:
      • complying super 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.

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      Last modified: 20 Dec 2019QC 18663