Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 270 - Schemes to take advantage of deductions  

SECTION 270-10   SCHEMES TO TAKE ADVANTAGE OF DEDUCTIONS  

Basic case

270-10(1)  
The consequences set out in section 270-15 result if:


(a) a deduction is allowable to a trust for the income year; and


(b) under a scheme, the following happen (in any order):


(i) the trust derives an amount of assessable income (the scheme assessable income ) in the income year; and

(ii) an outsider to the trust (see section 270-25 ) directly or indirectly provides a benefit (see section 270-20 ) to the trustee, to a beneficiary in the trust or to an associate of the trustee or of a beneficiary; and
Note:

The benefit may constitute all or any of the scheme assessable income.


(iii) the trustee, a beneficiary in the trust or an associate of the trustee or of a beneficiary, directly or indirectly provides a benefit to the outsider to the trust or to an associate of the outsider (other than an associate covered by any of paragraphs 270-25(1)(a) to (f)); and
Note:

The benefit may constitute all or any of the deduction.


(c) it is reasonable to conclude that:


(i) the trust derived the scheme assessable income; or

(ii) the outsider provided the benefit as mentioned in subparagraph (b)(ii); or

(iii) the trustee, beneficiary or associate provided the benefit as mentioned in subparagraph (b)(iii);
wholly or partly, but not merely incidentally, because the deduction would be allowable; and


(d) the trust is not an excepted trust under paragraph 272-100(b), (c) or (d) . Special case

270-10(2)  
If:


(a) under a scheme, a person who, before the scheme was entered into, was an outsider to a trust becomes:


(i) the trustee of the trust; or

(ii) a person with a fixed entitlement to a share of the income or capital of the trust; and


(b) if the person had not ceased to be an outsider to the trust, the requirements of subsection (1) would have been satisfied in relation to the scheme;

the requirements of subsection (1) are taken to have been satisfied in relation to the scheme.


 

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