Trust election status, trust type, details and tax payable

Instructions to complete family trust or interposed entity election, trust type, CCIV referable shares and MIT details.

When you must complete the election status

This item must be completed if the trustee:

• has made or is making a Family trust election
• is revoking or varying an existing Family trust election
• has made or is making an Interposed entity election
• is revoking an existing Interposed entity election.

If the trustee makes a family trust election or an interposed entity election, you may have to pay Family trust distribution tax if you distribute to an entity outside of the family group of the individual specified in the family trust election.

Family trust election status

If the trustee of the trust has not made or is not making a family trust election, do not complete this item.

Making or has previously made a family trust election

If the trustee is making a family trust election specifying the 2004–05 or later income year, write the appropriate income year in the 4–digit box at this item and complete a Family trust election, revocation or variation 2023 specifying the 2004–05 or later income year.

If the trustee has previously made a family trust election specifying an income year before 2022–23, write the appropriate income year in the 4–digit box at this item (for example, for the 2021–22 income year write 2022).

If the trustee has previously made a family trust election specifying an income year before 2004–05 and took advantage of the one-off opportunity in PS LA 2004/1 (GA) Lodgment opportunity for family trust and interposed entity elections to specify an earlier year, write the earlier income year specified in the 4–digit box at this item.

A trustee of the trust can't make a family trust election specifying a year earlier than 2004–05 in the Trust tax return 2023 (section 272-80 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936)).

Varying the test individual of a family trust election

Print V in the single box if the specified individual of a family trust election is being varied from a time in 2022–23. A Family trust election, revocation or variation 2023 must be completed and lodged with the 2022–23 tax return of the trust.

If the relevant conditions in section 272-80 of Schedule 2F to the ITAA 1936 are satisfied, the trust may vary an election, so a different individual is specified as the individual whose family group is taken into account in relation to the election.

The trust may only vary the specified individual of a family trust election once, except where doing so under subsection 272-80(5C) of Schedule 2F to the ITAA 1936 in relation to a relevant order, agreement or award mentioned in paragraphs 126-5(1)(a) to (f) of the Income Tax Assessment Act 1997 (ITAA 1997).

Revoking a family trust election

Print R in the single box if the family trust election made by the trust is being revoked in 2022–23. A Family trust election, revocation or variation 2023 must be completed and lodged with the 2022–23 tax return of the trust.

A family trust election can only be revoked by a trust that satisfies the relevant conditions in section 272-80 of Schedule 2F to the ITAA 1936.

Interposed entity election status

If the trustee of the trust has not made or is not making an interposed entity election, do not complete this item.

Making or has previously made an interposed entity election

If the trustee is making one or more interposed entity elections this year specifying a day in the 2004–05 or later income year, write the earliest income year specified in the box at this item, and complete an Interposed entity election or revocation 2023 for each election specifying a day in the 2004–05 or later income years.

If the trustee has previously made one or more interposed entity elections specifying a day in an income year before 2022–23, write the earliest income year specified in the box at this item.

A trustee of the trust can't make an interposed entity election specifying a year earlier than 2004–05 in the Trust tax return 2023 (section 272-85 of Schedule 2F to the ITAA 1936).

Revoking an interposed entity election

Print R in the single box if an interposed entity election made by the trust is being revoked from 2022–23. An Interposed entity election or revocation 2023 must be completed and lodged with the Trust tax return 2023.

An interposed entity election can only be revoked by a trust that satisfies all the relevant conditions in section 272-85 of Schedule 2F to the ITAA 1936.

 

 

 

 

Family trust distribution tax

A consequence of a trust making a family trust election or an interposed entity election is that under section 271-15 or section 271-20 of Schedule 2F to the ITAA 1936 a special tax, called family trust distribution tax (FTDT), is payable at 47% by the trustee on any conferral of present entitlement to, or distribution of, income or capital of the trust to persons who are not members of the family group of the specified individual within the meaning of section 272-90 of Schedule 2F to the ITAA 1936.

For this purpose a distribution of income or capital by a trust has the meaning given in sections 272-45 and 272-60 of Schedule 2F to the ITAA 1936.

The definition of family group includes a former spouse, a former widow or widower, and a former stepchild.

If FTDT is payable by you, complete the Family trust distribution tax payment advice and post it with your FTDT payment to us at the address shown on the FTDT payment advice. Make cheques or money orders payable to the Deputy Commissioner of Taxation and print ‘Not negotiable’ across the cheque. Tender all cheques in Australian currency. Do not send cash by post.

Definition of spouse

Your spouse includes another person (of any sex) who:

• you were in a relationship with that was registered under a prescribed state or territory law
• although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.

Interaction between family trust distribution tax and TFN withholding for closely held trust rules

If you are the trustee of a trust that has made a family trust election or an interposed entity election and make a payment or distribution to a beneficiary that is not subject to FTDT, you need to consider the TFN withholding for closely held trusts.

For more information, see Appendix 11.

Type of trust

Print in the first box the code from table 1 that best describes the type of trust for which the trust tax return is being lodged.

Descriptions of the types of trust are at table 2.

Print X in the second box at Type of trust if the trust is also a charity.

Table 1: Trust codes

Code	Type
C	Special disability trust
D	Deceased estate
E	Testamentary trust
F	Fixed trust, other than a fixed unit trust, CCIV sub-fund trust, or public unit trust described in code U, V, P or Q
H	Hybrid trust
S	Discretionary trust, where the main source of income of the trust is from service and/or management activities
T	Discretionary trust, where the main source of income of the trust is from trading activities
I	Discretionary trust, where the main source of income of the trust is from investment activities
M	Cash management unit trust
U	Fixed unit trust, other than a CCIV sub-fund trust or public unit trust described in code P or Q
V	CCIV sub-fund trust
P	Public unit trust (listed) other than a cash management unit trust or CCIV sub-fund trust
Q	Public unit trust (unlisted) other than a cash management unit trust or CCIV sub-fund trust

Table 2: Description of trusts

Type of trust	Description
Deceased estate	See Appendix 8.
Testamentary trust	A trust that resulted from a will, codicil, court order, or intestacy.
Discretionary trust	A trust that is not a fixed trust within the meaning of section 272-5 of Schedule 2F to the ITAA 1936. See also subsection 102UC(4) of the ITAA 1936.
CCIV sub-fund trust	A sub-fund of a CCIV which in section 195-110 of the ITAA 1997 is taken to be a separate CCIV sub-fund trust and in section 195-115, is taken to be a unit trust.
Fixed trust	A trust in which persons have fixed entitlements (as defined in section 272-5 of Schedule 2F to the ITAA 1936) to all income and capital of the trust at all times during the income year.
Fixed unit trust	A fixed trust in which interest in the income and capital of the trust are represented by units.
Hybrid trust	A trust that is not a fixed trust but in which persons have fixed entitlements (as defined in section 272-5 of Schedule 2F to the ITAA 1936) to income or capital of the trust during the income year.
Public unit trust	A fixed unit trust that is a widely held unit trust (as defined in section 272-105 of Schedule 2F to the ITAA 1936) at all times during the income year.
Public unit trust: listed	A public unit trust in which any of its units were listed for quotation on the official list of a stock exchange in Australia or elsewhere during the income year.
Public unit trust: unlisted	A public unit trust in which none of its units was listed for quotation on the official list of a stock exchange in Australia or elsewhere during the income year.
Special disability trust	A trust that has the meaning given by section 1209LExternal Link of the Social Security Act 1991.

CCIV sub-fund trusts

You must answer this question if you used code V at Type of trust.

Print X in the Yes box if the CCIV sub-fund trust owns shares that are referable to a CCIV sub-fund trust of the same CCIV as the CCIV sub-fund trust.

Otherwise, print X in the No box.

A corporate collective investment vehicle or CCIV, may have more than one CCIV sub-fund trust.

Managed investment trusts

Complete the following 3 questions:

• Is the trust a managed investment trust (MIT)?
• MIT type
• If the trust is a managed investment trust, has the trustee made an election into capital account treatment?

Is the trust a managed investment trust (MIT)?

You must answer this question if you used codes F, M, U, P or Q at Type of trust.

Print X in the Yes box at this item if the trust is a managed investment trust.

Otherwise, print X in the No box.

A MIT is broadly a publicly-held and commercially-operated collective investment trust that invests in primarily passive income activities. A trust qualifies as a MIT if all of the following apply for the income year in which it operates:

• the trustee is an Australian resident, or the central management and control of the trust is in Australia
• the trust does not carry on or control an active trading business
• the trust is a managed investment scheme
• the trust meets the widely held requirement
• the trust meets the closely held restriction
• the trust is operated or managed by an appropriately regulated entity.

MIT type

If you answered Yes at Is the trust a managed investment trust (MIT)?, you must choose a MIT type from the table below and print the code at MIT type.

MIT type	MIT code
Withholding MIT   A trust is a withholding MIT if it is a MIT (subject to certain exceptions), or would be a MIT except for either: temporary circumstances outside of its control the trustee of the trust does not make a fund payment in relation to the income year but meets the MIT requirements on the first and last day of the income year.	W
A managed investment trust that is not a withholding MIT.	N
Clean building MIT   A MIT is a clean building MIT if it: holds one or more clean buildings, including the land on which the buildings are situated does not derive assessable income from any taxable Australian property, other than from the clean buildings or assets that are reasonably incidental to those buildings.	C

If the trust is a managed investment trust, has the trustee made an election into capital account treatment?

You must answer this question if you answered Yes at Is the trust a managed investment trust (MIT)?

If the trust is:

• not a managed investment trust, leave this question blank.
• a managed investment trust and the trustee has never made an election, print X in the No box.
• a managed investment trust and the trustee has made an election, print X in the Yes box.

MIT capital treatment rules

The MIT capital treatment rules allow the trustee of an eligible MIT to irrevocably choose to apply the capital gains tax provisions for the taxation of gains and losses on disposal of eligible assets, rather than on revenue account. For the purposes of the MIT capital treatment rules, a disposal also includes ceasing to own, or otherwise realising, the asset.

You must make the election for the first year the trust qualifies as a MIT. The election is irrevocable as long as the MIT remains eligible. If a MIT does not make a capital account treatment election in the first year, it will be taxed on revenue account under general tax law principles.

Who is eligible to make an election?

The trustee of a MIT may make an election. The election must be made in the approved form.

Making an election – Trusts that became a MIT prior to 2009–10

When must a trustee make an election?

A trustee had to make an election by 2 September 2010. A trustee may make an election by a later date, if the Commissioner allows it.

When will an election take effect?

Once a trustee makes the election, it will have effect for 2008–09 and later income years.

How can a trustee make an election?

The period in which a trustee can make an election for a trust that became a MIT prior to the 2009–10 income year has now expired.

However, the Commissioner may, in exceptional circumstances, allow a trustee to make the election upon request.

Making an election – Trusts that became a MIT in 2009–10 or a later income year

When must a trustee make an election?

A trustee must make an election on or before the latest of the following days:

• the day the trust is required to lodge its income tax return for the income year in which it became a MIT
• a later date, if the Commissioner allows it.

When will an election take effect?

Once a trustee makes the election, it will have effect for the income year in which the trust becomes a MIT and later income years.

How can the trustee make an election?

A trustee of a MIT can make an election by answering Yes at If the trust is a managed investment trust, has the trustee made an election into capital account treatment? in the trust tax return.

A trustee of an AMIT can make an election by answering Yes at Capital account election in the AMIT tax return.

A trustee must make the election within the relevant timeframe.

If a trust became a MIT prior to 2009–10 and a trustee of the MIT had previously made an election for capital treatment, the trustee of the MIT must still answer Yes to this question for each year the trustee of the MIT is required to complete a trust tax return or AMIT tax return.

Is any tax payable by the trustee?

Print X in the Yes box at this item if the trustee is liable to pay any tax, even if payments have been made in advance. Otherwise, print X in the No box.

The trustee is generally liable to pay tax on:

• that part of the net income of the trust that has not been assessed to either a presently entitled beneficiary or the trustee on behalf of a presently entitled beneficiary; see Is a beneficiary presently entitled to a share of the income of the trust estate?
• shares of the net income of a trust in respect of beneficiaries, whether or not the beneficiaries are acting in their capacity as trustee of another trust estate, who are presently entitled to a share of the income of the trust estate but are non-resident at the end of the income year; see Non-resident beneficiary additional information
• shares of the net income of a trust in respect of beneficiaries who are presently entitled to a share of the income of the trust estate but are under a legal disability; see Appendix 10
• if the trust is a special disability trust and the principal beneficiary is an Australian resident at the end of the income year, the whole of the net income of the trust
• if an election has been made for the trustee to be assessed on a capital gain of the trust, the amount of the capital gain.

The rate of tax payable by the trustee will depend on the type of trust and the beneficiary's individual circumstances.

If the beneficiary is presently entitled to a share of the income of the trust estate, not under a legal disability, and is a resident at the end of the income year, then the beneficiary, not the trustee, is generally taxed on that same percentage share of the net income of the trust. This amount may be different if any beneficiary or the trustee has been made specifically entitled to an amount of franked distribution or capital gains (that is, the capital gain or franked distribution has been streamed to a particular beneficiary).

Net income means the total assessable income calculated as if the trustee was a resident taxpayer, less all allowable deductions, except deductions for net farm management deposits. For more information, see Appendix 10. In the case of any beneficiary with no beneficial interest in the trust corpus, past losses are required to be met out of corpus.

Request for a non-taxable advice

If the trustee is not assessed on income and a non-taxable advice is required, provide a request on a separate sheet of paper headed ‘Request for a non-taxable advice’ and include the trust name and TFN with the details. Sign the request, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

Final tax return

Print X in appropriate box.

If the trustee does not expect to lodge further tax returns, provide a statement on a separate sheet of paper headed ‘Final trust tax return’ showing:

• the reason further tax returns will not be lodged, and
• the manner of disposal of any assets of the trust if not disclosed elsewhere in the tax return.

Attach the statement to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

If the trust is a subsidiary member of a consolidated group or MEC group, print X in the No box at Final tax return if membership of the group is the only reason for which the trust will not be required to lodge future returns.

Electronic funds transfer (EFT)

We need your financial institution details to pay any refund owing to you, even if you have provided them before, including:

• Bank State Branch (BSB) number (this number has 6 digits, do not include spaces or hyphens)
• account number (this number has no more than 9 digits, do not include spaces or hyphens)
• account name, for example Citizen Pty Ltd. Do not show account type, such as cheque in the account name. Include spaces between each word and initials where required. If it exceeds 32 characters, provide the first 32 characters only.

Your refund can only be paid into a recognised financial institution account located in Australia.

Direct debit

The trustee can pay tax owing directly from their account using EFT. A trustee can provide separate account details for direct debit and direct refund.

Trustees can arrange direct debit by using a tax agent who can lodge tax returns through the practitioner lodgment service (PLS), or by completing a Direct debit request form. Allow at least 5 working days for processing of the direct debit request form. Tax agents can transmit payment details up to 3 working days before the due date once the direct debit request has been processed.

If the trustee used direct debit last year and the account details provided are correct, you do not need to make another request. The notice of assessment will display a message that the tax debt will be debited from the nominated account on the due date.

If the account details have changed, complete a direct debit request if you want to use direct debit this year.

A direct debit request remains in force until it is cancelled. Cancellations must be received 3 working days before the payment date.

There is no provision for a direct debit election in the tax return. The direct debit request is also available as part of PLS software packages.

Continue to: Business description and status – items 1 to 2