Part A: The trust
Follow these steps to work out whether you, as trustee of the test trust, are subject to the rules:
Step 1 – Determine residency status of trust
The rules that apply to you depend on the residency status of the test trust.
If the test trust is a resident trust:
- TB reporting rules apply
- TFN withholding rules apply.
If the test trust is a non-resident trust:
- TB reporting rules apply
- TFN withholding rules do not apply.
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' (see note), or
- is a discretionary trust (one that is not a fixed trust).
Note: 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. 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 an exclusion applies
Use the following table to determine if the test trust is excluded from the definition of a closely held trust for each set of rules.
Exclusions from TB reporting rules and TFN withholding rules
Type of test trust
|
TB reporting
rules apply
|
TFN withholding
rules apply
|
Complying super fund
|
Excluded
|
Excluded
|
Complying approved deposit fund
|
Excluded
|
Excluded
|
Pooled superannuation trust
|
Excluded
|
Excluded
|
Deceased estate – before the end of the income year in which the fifth anniversary of the individual's death occurred
|
Excluded
|
Excluded
|
Deceased estate – after the year of income in which the fifth anniversary of the individual's death occurred
|
Not excluded
|
Not excluded
|
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
|
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
|
Unit trust – where the units are listed on the stock market operated by ASX Limited
|
Excluded
|
Excluded
|
Family trust (that is, one with a valid family trust election in force)
|
Excluded, but not excluded from trustee beneficiary non-disclosure tax for circular trust distributions
|
Not excluded
|
A trust that is subject to a valid interposed entity election
|
Excluded, but not excluded from trustee beneficiary non-disclosure tax for circular trust distributions
|
Not excluded
|
A trust that forms part of a 'family group'
|
Excluded, but not excluded from trustee beneficiary non-disclosure tax for circular trust distributions
|
Not excluded
|
A discretionary mutual fund
|
Not excluded
|
Excluded
|
An employee share trust for an employee share scheme
|
Not excluded
|
Excluded
|
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.
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