• Part A: the trust

    To work out whether you, as trustee of the test trust, are subject to the rules, you must:

    Step

    Determine whether you are …

    1

    subject to the rules due to residency status

    2

    a closely held trust

    3

    excluded from the rules (because of a specific exclusion)

    Step 1 - determine residency status of trust

    The rules apply to you depending on the residency status of test trust as follows:

    If the test trust …

    TB reporting
    rules apply

    TFN withholding
    rules apply

    is a resident trust

    Yes

    Yes

    is a non-resident trust

    Yes

    No

    Step 2 - determine whether the test trust is a closely held trust

    A trust will be a closely held trust when it either:

    • satisfies the '20/75 test'*
    • is a discretionary trust (one that is not a fixed trust).

    *A trust satisfies the 20/75 test where up to 20 individuals have between them, directly or indirectly, fixed entitlements to a 75% or greater share of the income or capital of the trust. Special rules treat the trustees of some discretionary trusts as individuals and an individual and all of his or her relatives are taken to be one individual for the purposes of the test.

    If the test trust does not meet either of the requirements, it is not a closely held trust and you do not need to continue.

    Step 3 - determine if there is an exclusion that applies

    Determine for each set of rules if the test trust is excluded from the definition of a closely held trust.

    If the test trust …

    TB reporting
    rules apply

    TFN withholding
    rules apply

    is a complying superannuation fund

    Excluded

    Excluded

    is a complying approved deposit fund

    Excluded

    Excluded

    is a pooled superannuation trust

    Excluded

    Excluded

    is a deceased estate - before the end of the income year in which the 5th anniversary of the individual's death occurred

    Excluded

    Excluded

    is a deceased estate - after the year of income in which the 5th anniversary of the individual's death occurred

    Not excluded

    Not excluded

    is a fixed unit trust - where all of the income and capital is subject to fixed entitlements, held directly or indirectly, for the benefit of entities whose income is exempt from income tax

    Excluded

    Excluded

    is a fixed unit trust - where only some of the income and capital is held for the benefit of entities whose income is exempt from income tax

    Not excluded

    Not excluded

    is a unit trust - where the units are listed on the stock market operated by ASX Limited

    Excluded

    Excluded

    is a family trust (that is, one with a valid family trust election in force)

    Excluded

    Not excluded

    is a trust that is subject to a valid interposed entity election

    Excluded

    Not excluded

    is a trust that forms part of a 'family group'

    Excluded

    Not excluded

    is a discretionary mutual fund

    Not excluded

    Excluded

    is an employee share trust for an employee share scheme

    Not excluded

    Excluded

    is a law practice trust

    Not excluded

    Excluded

    If the test trust is excluded for both sets of rules, you do not need to continue.

    If it is not excluded from one or both sets of rules, you need to complete Part B to determine whether for each beneficiary the test trust is affected by the rules.

      Last modified: 22 Apr 2016QC 21158