TAXATION ADMINISTRATION ACT 1953

SCHEDULE 1 - COLLECTION AND RECOVERY OF INCOME TAX AND OTHER LIABILITIES  

Note: See section 3AA .

Chapter 2 - Collection, recovery and administration of income tax  

PART 2-10 - PAY AS YOU GO (PAYG) INSTALMENTS  

Division 45 - Instalment payments  

Subdivision 45-I - Trust income included in instalment income of beneficiary  

SECTION 45-287   WHEN TRUSTS ARE DISQUALIFIED DUE TO CONCENTRATED OWNERSHIP  

Concentrated ownership

45-287(1)  
This section applies to a trust if an individual holds, or up to 20 individuals hold between them directly or indirectly and for their own benefit, interests in the trust:


(a) carrying *fixed entitlements to:


(i) at least 75% of the trust ' s income; or

(ii) at least 75% of the trust ' s capital; or


(b) if beneficiaries of the trust have a right to vote in respect of activities of the trust - carrying at least 75% of those voting rights.

Single individual

45-287(2)  
Subsection (1) operates as if all of these were a single individual:


(a) an individual, whether or not the individual holds interests in the trust; and


(b) the individual ' s *associates; and


(c) for any interests in respect of which other individuals are nominees of the individual or of the individual ' s associates - those other individuals. Concentrated ownership - potential due to possible variation of rights etc.

45-287(3)  
This section also applies to a trust if, because of:


(a) any provision in the trust ' s constituent document, or in any contract, agreement or instrument:


(i) authorising the variation or abrogation of rights attaching to any of the interests in the trust; or

(ii) relating to the conversion, cancellation, extinguishment or redemption of any of those interests; or


(b) any contract, *arrangement, option or instrument under which a person has power to acquire any of those interests; or


(c) any power, authority or discretion in a person in relation to the rights attaching to any of those interests;

it is reasonable to conclude that the rights attaching to any of the interests are capable of being varied or abrogated in such a way (even if they are not in fact varied or abrogated in that way) that, directly or indirectly, the trust would be disqualified under subsection (1).

Tracing

45-287(4)  
In applying this section:


(a) if a *complying superannuation fund, *approved deposit fund or *superannuation fund for foreign residents has more than 50 members and has, directly or indirectly, a *fixed entitlement to any of the trust ' s income or capital - that entitlement is taken to be held by more than 20 individuals for their own benefit; and


(b) if a complying superannuation fund, approved deposit fund or superannuation fund for foreign residents has 50 or fewer members and has, directly or indirectly, a fixed entitlement to any of the trust ' s income or capital - each of the members is taken to have a share of that entitlement, in equal proportions, for his or her own benefit.




This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.