Tax Laws Amendment (2007 Measures No. 4) Act 2007 (143 of 2007)

Schedule 8   Family trusts

Income Tax Assessment Act 1936

6   Subsections 272-85(5) and (6) in Schedule 2F

Repeal the subsections, substitute:

Election generally cannot be revoked

(5) Subject to subsections (5A) and (5B), the election cannot be revoked.

Revocation cases

(5A) A company, the partners in any partnership or the trustee of a trust may, in respect of an income year during the period specified in subsection (5C), revoke the election if at the election commencement time, or at a later time, the entity was, or becomes, a member of the family group (within the meaning of subsection 272-90(3A) or (5)) of the individual specified in the family trust election.

(5B) The election is taken to be revoked if the family trust election to which it relates is revoked.

Period to revoke the election

(5C) A company, the partners in any partnership or the trustee of a trust cannot revoke an election under subsection (5A) unless the revocation is in respect of an income year that occurs during the period:

(a) starting at the later of:

(i) the beginning of the income year specified in the election; and

(ii) 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 subparagraph (i) or (ii); or

(b) starting at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year.

How revocation is made

(6) A revocation must be made in the entity's return of income for the income year from which the revocation is to be effective. If the entity is not required to give a return for the income year, the revocation must:

(a) be in writing and in the approved form; and

(b) specify the income year from which the revocation is to be effective; and

(c) be given to the Commissioner on or before:

(i) 2 months after the end of that income year; or

(ii) such later day as the Commissioner allows.

When election is in force

(6A) The election is in force:

(a) if it is not revoked - at all times after the election commencement time (see subsection (6B)); or

(b) if it is revoked under subsection (5A) - at all times from the election commencement time to the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (6)); or

(c) if the family trust election to which it relates is revoked under subsection 272-80(6) - at all times from the election commencement time until the later time specified in that revocation; or

(d) if the family trust election to which it relates is revoked under subsection 272-80(6A) - at all times from the election commencement time to the end of the income year immediately prior to the income year from which the family trust revocation is to be effective (see subsection 272-80(8)).

Election commencement time

(6B) The election commencement time is:

(a) if the company, partnership or trust does not pass the family control test at all times in the specified income year - the later of:

(i) the beginning of the specified day; and

(ii) the earliest time from which the company, partnership or trust does pass the family control test for the remainder of the specified income year; or

(b) in any other case - the beginning of the specified day.