Income Tax Assessment Act 1997
A trust is a foreign controlled Australian trust (or an FCAT ) at a particular time if, and only if, at that time, it is an *Australian trust to which at least one of the following paragraphs applies:
(a) not more than 5 *foreign entities (each of which holds a *TC control interest in the trust that is at least 1%) hold a total of TC control interests in the trust that is 50% or more;
(b) a foreign entity holds a TC control interest in the trust that is 40% or more, and no other entity or entities (except an *associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the trust;
(c) all of the following subparagraphs apply to the trust:
(i) at least one of the objects or beneficiaries of the trust is a foreign entity;
(ii) there has been at least one distribution of income or capital of the trust made to such an object or beneficiary (whether directly or indirectly) during the income year in which that particular time occurs, or during the preceding 2 income years;
(iii) the total TC control interests in the trust that are held by all its beneficiaries that are *Australian entities do not exceed 50%;
(d) a foreign entity is in a position to control the trust (see subsection (2)). 820-790(2)
A *foreign entity is in a position to control a trust if, and only if:
(a) the entity, or an *associate entity of the entity, whether alone or with other associate entities (the relevant entity ), has the power to obtain the beneficial enjoyment of the trust ' s capital or income (whether or not by exercising its power of appointment or revocation, and whether with or without another entity ' s consent); or
(b) the relevant entity is able to control the application of the trust ' s capital or income in any manner (whether directly or indirectly); or
(c) the relevant entity is able to do a thing mentioned in paragraph (a) or (b) under a *scheme; or
(d) a trustee of the trust is accustomed or is under an obligation (whether formally or informally), or might reasonably be expected, to act in accordance with the relevant entity ' s directions, instructions or wishes; or
(e) the relevant entity is able to remove or appoint a trustee of the trust. Exception 820-790(3)
Despite subsection (1), a trust is not an FCAT at a particular time if, at that time:
(a) the trust would, apart from this subsection, be an FCAT only because of paragraph (1)(a) or (b); but
(b) the total of the following interests would be less than 20% if paragraphs 820-875(2)(a) and (b) were disregarded:
(i) the *TC direct control interest in the trust held by the *foreign entity or entities mentioned in paragraph (1)(a), (b) or (c);
(ii) the *TC indirect control interest in the trust held by the foreign entity or entities;
(iii) the TC direct control interests in the trust held by any *associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii));
(iv) the TC indirect control interests in the trust held by the entity ' s associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)).
Paragraphs 820-875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.
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