• Interposed entity election status

    You must complete this item if any of the following apply:

    • The partners are making one or more interposed entity elections specifying a day in the 2004–05 or later income year in accordance with section 272-85 of Schedule 2F to the ITAA 1936.
    • The partners have previously made one or more interposed entity elections specifying a day in any income years from 1994-95 to 2014–15 in accordance with section 272-85 of Schedule 2F to the ITAA 1936 and, if applicable, items 23 or 23A of Schedule 1 to the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 and at least one interposed entity election has not been revoked in an income year before the 2015–16 income year in accordance with subsections 272-85(5) and 272–85(6) of Schedule 2F to the ITAA 1936.
    • The partners are revoking, from a time in the 2015–16 income year, one or more previously made interposed entity elections in accordance with section 272-85 of Schedule 2F to the ITAA 1936.

    A partner cannot make an interposed entity election specifying a year earlier than the 2004–05 income year (section 272-85 of Schedule 2F to the ITAA 1936). Do not attach election forms for an interposed entity election made specifying an income year before the 2004–05 income year to the Partnership tax return 2016.

    Instructions on how to complete the Interposed entity election or revocation 2016 are on the form itself.

    If the partnership’s tax return is not lodged electronically, and an Interposed entity election or revocation 2016 is being lodged with your partnership’s 2016 tax return, send your tax return and the Interposed entity election or revocation 2016, to:

    Australian Taxation Office
    GPO Box 9845
    IN YOUR CAPITAL CITY

    If the partners have not made or are not making any interposed entity elections, do not complete this item.

    If the partners are making one or more interposed entity elections 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 2016 for each election specifying a day in the 2004–05 or later income years.

    Example 1: New election specifying the current year

    The partners have not previously made an interposed entity election. They now want to make an interposed entity election specifying a day in the 2015–16 income year.

    They write 2016 in the box at this item.

    They complete an Interposed entity election or revocation 2016, specifying a day in the 2015–16 income year.

    They attach the completed form to their Partnership tax return 2016.

    End of example

     

    Example 2: New election specifying an earlier year

    The partners have not previously made an interposed entity election. They now want to make an interposed entity election specifying a day in the 2004–05 income year.

    They write 2005 in the box at this item.

    They complete an Interposed entity election or revocation 2016, specifying a day in the 2004–05 income year.

    They attach the completed form to their Partnership tax return 2016.

    End of example

    If the partners have previously made one or more elections specifying a day in an income year before the 2015–16 income year, write the earliest income year specified in the box at this item unless the partners are making one or more elections specifying a day in the 2004–05 or later income year.

    Example 3: Multiple existing interposed entity elections

    The partners have previously made interposed entity elections specifying a day in the 1997–98 and 2005–06 income years respectively. They are not making another interposed entity election.

    They write 1998 in the box at this item.

    The partners do not need to complete an Interposed entity election or revocation 2016.

    End of example

     

    Example 4: Additional election specifying a current year

    The partners have previously made an interposed entity election specifying a day in the 1996–97 income year and want to make another interposed entity election specifying a day in the 2015–16 income year.

    They write 2016 in the box at this item.

    They complete an Interposed entity election or revocation 2016, specifying a day in the 2015–16 income year.

    They attach the completed form to their Partnership tax return 2016.

    End of example

    If the partners have previously made one or more elections specifying a day in an income year before 2004–05 and took advantage of the former one-off opportunity in Law Administration Practice Statement PS LA 2004/1 (GA) Lodgment opportunity for family trust and interposed entity elections to specify an earlier year, write the earliest income year specified unless the partners are making one or more elections specifying a day in the 2004–05 or later income years.

    Example 5: Existing elections, taken advantage of the one-off opportunity

    The partners have previously made an interposed entity election specifying a day in the 2002–03 income year. The partners took advantage of the former one-off opportunity in Law Administration Practice Statement PS LA 2004/1 (GA) Lodgment opportunity for family trust and interposed entity elections requesting that the election apply from the 1997–98 income year.

    They write 1998 in the box at this item.

    The partners do not need to complete an Interposed entity election or revocation 2016.

    End of example

    Revocation

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

    The partners cannot revoke an interposed entity election unless the revocation is in respect of an income year that occurs during the period:

    • starting on 1 July 2007 and finishing on 30 June 2009
    • starting at the later of    
      • the beginning of the income year specified in the election, and
      • the beginning of the income year in which the entity became a member of the family group
        and
      • finishing at the end of the fourth income year after the income year referred to in the above two dot points.
       

    The revocation must be made with the entity’s tax return for the income year from which the revocation is to be effective.

    Print R in the box at this item if the interposed entity election made by the partners is being revoked from the 2015–16 income year. An Interposed entity election or revocation 2016 must be completed and lodged with their Partnership tax return 2016.

    Example 6: Revoking an interposed entity election

    The partners have previously made an interposed entity election specifying a day in the 2007–08 income year and meet the conditions to revoke their interposed entity election in the 2015–16 income year.

    They write 2008 in the box at this item and print R in the box at this item. The partners need to complete an Interposed entity election or revocation 2016 and lodge this with their Partnership tax return 2016.

    An interposed entity election is taken to be revoked if the family trust election to which it relates is revoked.

    End of example

    Family trust distribution tax

    A consequence of a partnership making an interposed entity election is that under section 271-25 of Schedule 2F to the ITAA 1936 a special tax, called family trust distribution tax (FTDT), is payable at 49% on any conferral of present entitlement to, or distribution of, income or capital of the partnership to persons who are not members of the family group of the specified individual within the meaning of section 272-90 of that schedule.

    A distribution of income or capital by a partnership is defined in sections 272-55 and 272-60 of Schedule 2F to the ITAA 1936.

    Post the Family trust distribution tax payment advice with your FTDT payment to the ATO address:

    NSW, QLD or ACT residents

    Australian Taxation Office
    Locked Bag 1793
    PENRITH  NSW  1793

    VIC, SA, WA, Tas or NT residents

    Australian Taxation Office
    Locked Bag 1936
    ALBURY  NSW  1936

    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.

    Last modified: 10 Aug 2016QC 48217