ATO ID 2008/73: Test individual and amendments to FTE legislation
Date of decision: 7 May 2008
Year of income: Year ended 30 June 2008
Business line: Private Groups and High Wealth Individuals

Issue
Does subsection 272-80(11) of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) prevent the trustee of a trust making a family trust election (FTE) in respect of that trust after an FTE previously made in respect of the trust has been revoked?

Decision
Yes. Subsection 272-80(11) of Schedule 2F to the ITAA 1936 will prevent the trustee of a trust making an FTE in respect of that trust.

Facts
X Trust is a fixed trust for the purposes of section 272-65 of Schedule 2F to the ITAA 1936. The trustee of X Trust made an FTE specifying the 2000-01 year of income. During the 2004-05 year of income all of the fixed entitlements in X Trust were sold and the trustee decided to revoke the FTE in accordance with subsection 272-80(6) of Schedule 2F to the ITAA 1936. Consequently, the trustee lodged an FTE revocation with X Trust's 2004-05 income tax return. The trustee would like to make an FTE specifying the 2007-08 year of income.

Reasons for decision
Summary: Subsection 272-80(11) of Schedule 2F to the ITAA 1936 provides that, 'the trustee must not make more than one election under this section in relation to the trust'. In this case the X Trust had previously made an FTE. However, this FTE was revoked in accordance with subsection 272-80(6) of Schedule 2F to the ITAA 1936. According to subsection 272-80(11) of Schedule 2F to the ITAA 1936 no more than one FTE can be made in relation to a trust. Therefore, the trustee is prevented from making a further FTE.

Legislative references: Income Tax Assessment Act 1936 Schedule 2F section 272-65 Schedule 2F subsection 272-80(6) Schedule 2F subsection 272-80(11)
Subject references: Family trust election Family trust election revocation Family trusts Fixed trusts Trusts