Income Tax Assessment Act 1936

If there is a change in ownership or control of a trust or an abnormal trading in its units, it:

• may be prevented from deducting its tax losses of earlier income years; and

• may have to work out in a special way its net income and tax loss for the income year; and

• may be prevented from deducting certain amounts in respect of debts incurred in the income year or earlier income years.

This will not be the case if the trust is an excepted trust. However, if it became one by making a family trust election, a special tax may be payable on certain distributions and other amounts.

If a trust is involved in a scheme to take advantage of deductions, it may be prevented from making full use of them.