Private ruling: Deceased estate p rimary test
Date of advice: 9 September 2025
Published: 17 November 2025
Date scheme commenced: 1 January 20XX

Ruling: Q1: Are the natural children of the Deceased included in the Deceased's Spouse's (the Primary/Test Individual's) family group for the purposes of the Trust under section 272-95 of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes, under subsection 272-95(1) (b) of the ITAA 1936 a child of the Primary individual's spouse is a member of that test individual's family group. Section 272-90(2) of Schedule 2F to the ITAA 1936, provides 'A person does not cease to be a family member merely because of the death of any other family member. | Q2: If the Test Individual marries or enters a de facto relationship, will the natural children of the Deceased continue to be members of the Test Individuals family group for the purposes of the Trust? | A2: Yes, once the Test Individual takes a new spouse they are no longer treated as the spouse of the Deceased, as subsection 272-95(2) no longer applies, and thus subsection 960-255(2) and paragraph 272-95(1)(a) no longer applies. However, paragraph 272-90(2A)(c) is enlivened and certain former family members of the primary individual's family group in relation to distributions if they were a member of the primary individual's family before the breakdown in marriage and they are a person who was a child of the spouse of the Primary individual. This private ruling applies for the following period: From 1 July 20XX and thereafter for the period of the Deceased's spouse's lifetime. The scheme commenced on: 1 January 20XX

Relevant facts and circumstances: This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect, and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The Deceased died on xx XX 20XX. The Deceased made a last Will on xx XX 20XX. XX was the spouse of the Deceased. The Deceased had X natural adult children from their first marriage. There are two executors of the Deceased's Will. A Life Interest trust was formed under Deed according to the Deceased's Will in favour of the Test Individual. Property of the Life Interest trust according to the Will consists of real property and cash. The Executors are also the Trustees for the trust. Under the terms of the Deceased's Will the property of the Deceased will be held in trust for the benefit of the Test Individual during their lifetime and upon their passing, for the benefit of the Deceased's X adult children. The term of the Will specifies the capital held in the Trust be required to produce at minimum $XXX,000 + CPI (post tax) annually to be distributed to the Test Individual during their lifetime. Should the income of the Trust fall short of the specified amount, the Trustees have the power to access the capital of the Trust to meet any shortfall. It is proposed that the Trust will make a family trust election subject to section 272-80 of Schedule 2F of the ITAA 1936, with the Test Individual as the primary individual (test individual). The Test Individual has not remarried nor entered into a de-facto relationship. The Trust is a non-fixed trust for the purposes of section 272-70 of schedule 2F of the ITAA 1936. Assumption A family trust election subject to section 272-80 of Schedule 2F of the ITAA 1936 is made by the Trustees on behalf of the Trust.


Reasons for decision: Summary: Under subsection 272-95(1) (b) of the ITAA 1936 the natural children of the Deceased are considered children of the test individual therefore they are members of that test individual's family group. Section 272-90(2) of Schedule 2F to the ITAA 1936, provides 'A person does not cease to be a family member merely because of the death of any other family member. | Detailed Reasoning - Detailed reasoning: All references in this reasoning are in relation to the Income Tax Assessment Act 1936 unless otherwise stated . To be eligible to make a family trust election under subsection 272-80(1), subsection 272-80(4) requires that the Trust meets the family control test in section 272-87. In relation to the requirements for making the family trust election, subsection 272-80(4A) states: The specified income year may be a year before the one in which the election is made if: a) at all times in the period from the beginning of the specified income year until 30 June in the income year before the one during which the election is made, the trust passes the family control test (see section 272-87); and b) either: i. any conferrals of present entitlement to income or capital of the trust made by the trustee during that period have been made on; or ii. any distributions of income or capital of the trust made by the trustee during that period have been made to; the individual specified in the election or members of that individual's family group. The assumption of this ruling is that paragraph 272-80(4A)(b) will be met in relation to the Trust, and thus the Commissioner need only consider whether the requirements of paragraph 272 80(4A)(a) are satisfied. Subsections 272-87(1) and (2) state: 1) A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if: a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of: (i) the individual (the primary individual ) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or (ii) one or more members of the primary individual's family (see section 272-95); or (iii) the primary individual and one or more members of the primary individual's family; or b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual's family; or c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of: (i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or (ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii). | Detailed Reasoning - Legislative position prior to the Deceased's death: Subsection 272-95(1) states: The family of an individual (the test individual ) consists of the test individual and all of the following (if applicable): (a) any parent, grandparent, brother or sister of the test individual or the test individual's spouse; (b) any nephew, niece or child of the test individual or the test individual's spouse; (c) any lineal descendant of a nephew, niece or child referred to in paragraph (b); (d the spouse of the test individual or of anyone who is a member of the test individual's family because of paragraphs (a), (b) and (c). Note 1 to this subsection states that a child, parent and spouse are defined in subsection 6(1) of the ITAA 1936, for which the definition under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) applies, being: child , in relation to a person, includes: (a) an adopted child, a stepchild or an ex-nuptial child of the person; and (b) a child of the person's spouse; and (c) someone who is a child of the person within the meaning of the Family Law Act 1975 . parent : an individual is the parent of anyone who is the individual's *child. spouse of an individual includes: (a) another individual (whether of the same sex or a different sex) with whom the individual is in a relationship that is registered under a *State law or *Territory law prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and (b) another individual who, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple. The Deceased's spouse is the test individual and each individual's relationship to them must be tested to determine if they are a member of the test individual's family group. In applying the definitions of child and parent, as the Test Individual was the Deceased's spouse until the date of their death, the Deceased was the parent of the X adult children. Therefore, the Test Individual was their parent, and they are members of their family group for the purposes of the definition in paragraph 272-95(1)(a) as the term 'parent' is defined in subsection 995-1. Note 2 to subsection 272-95(1) states that 'section 960-255 of the ITAA 1997 may be relevant to determining relationships for the purposes of paragraph (1)(a)' and subsection 960-255(2) of the ITAA 1997 states: If one individual is the child of another individual because of the definition of child in subsection 995-1(1), relationships traced to, from or through the individual, and family groups of which either individual is a member, are to be determined in the same way as if the individual were the natural child of the other individual. The effect of subsection 960-255 is that the four adult stepchildren of the Test Individual are treated as the natural children of the Test Individual. | Detailed Reasoning - Question 2: If the Test Individual marries or enters a de facto relationship, will the natural children of the Deceased continue to be members of the Test Individuals family group for the purposes of the Trust? | Summary: If Test Individual takes a new spouse then they are no longer treated as the spouse of Deceased, as subsection 272-95(2) no longer applies, and thus subsection 960-255(2) and paragraph 272-95(1)(a) no longer apply and section 960-255 will then apply to that new relationship, as it only applies to the '2 people who are a couple', as referred to in subsection 960-252(1), and their children. However, paragraph 272-90(2A)(c) is enlivened and certain former family are members of the primary individual's family group in relation to distributions if they were a member of the primary individual's family before the breakdown in marriage and they are a person who was a child of the spouse of the primary individual. | Detailed Reasoning - Test Individual marries or takes a new spouse: Subsection 272-90(2A) allows for certain former family members to remain members of the primary individual's family group. This subsection states: The following persons are members of the primary individual's family group in relation to the conferral or distribution: (a) a person who was a spouse of either the primary individual or of a member of the primary individual's family before a breakdown in the marriage or relationship; and (b) a person: (i) who was the spouse of either the primary individual or of a member of the primary individual's family immediately before the death of the primary individual or member of the primary individual's family; and (ii) who is now the spouse of a person who is not a member of the primary individual's family; and (c) a person who was a child of the spouse of either the primary individual or of a member of the primary individual's family before a breakdown in the marriage or relationship of the primary individual or the member of the primary individual's family. Note: The fact that a person is a member of the family group of an individual under this subsection does not mean that the person is a member of the individual's family under section 272-95. Subsection 272-95(2) and subsection 272-90(2A) were both inserted at the same time and sections 272-95 and 272-90 contain notes that reference each other. In addition to the note at the end of subsection 272-90(2A), quoted directly above, the note to section 272-95 states: A person who is no longer a member of an individual's family under this section may still be a member of the individual's family group under subsection 272-90(2A) Thus, sections 272-90 and 272-95 are to be read together in order to determine where an individual is a member of the family group. Relevant to the interaction between sections 272-90 and 272-95, the definition of 'breakdown in the marriage or relationship' in section 272-140 states: breakdown in the marriage or relationship of an individual: this occurs if the individual is living with another individual on a genuine domestic basis in a relationship as a couple (whether the individuals are the same sex or different sexes and whether legally married or not) and ceases to do so. When the Deceased died, they ceased to live with the Test Individual on a genuine domestic basis and accordingly there is a breakdown in the relationship at that time. If we apply this definition to paragraph 272-90(2A)(a), the conditions set down in that paragraph would also be met at the time of the Deceased's death. However, the definition of 'breakdown in the marriage or relationship' and the conditions of paragraph 272-90(2A)(a) are satisfied only because the Deceased died. Subsection 272-95(2) operates to exclude mere death from affecting the application of section 272-95, so there is not a 'breakdown in the marriage or relationship' at the time of death for the purpose of applying paragraph 272-90(2A)(a). By contrast, paragraph 272-90(2A)(b) applies when a surviving spouse takes a new spouse. The taking of a new spouse is a factor beyond mere death, and in these circumstances subsection 272-95(2) does not affect the application of paragraph 272-90(2A)(b). If at some point after the Deceased's death the Test Individual marries or takes a new spouse, paragraph 272-90(2A)(b) is enlivened and subsection 272-95(2) will not affect the application of the other subsections of sections 272-90 or section 272-95. In addition, subsection 272-95(2) does not affect the application of section 960-255, or of the definitions of 'child', 'parent', and 'spouse' in subsection 6(1) on the death of a spouse. In the given circumstances, it only operates such that the death of the Deceased does not preclude paragraph 272-95(1)(a) applying to the relationship between the Test Individual and the Deceased's natural children. If the Test Individual takes a new spouse, section 960-255 will then apply to that new relationship, as it only applies to the '2 people who are a couple', as referred to in subsection 960-252(1), and their children. In your circumstances paragraph 272-90(2A)(c) is enlivened and certain former family are members of the primary individual's family group in relation to distributions if they were a member of the primary individual's family before the breakdown in marriage and they are a person who was a child of the spouse of the primary individual. Therefore, the Deceased's children will still be considered to be a member of the Primary individual's family group.

Subject: Deceased estate p rimary test: Issue 1. Test individual's family - Division 272 of the Income Tax Assessment Act 1936 | Issue: Test individual's family - Division 272 of the Income Tax Assessment Act 1936 | Question 1: Are the natural children of the Deceased included in the Test Individual's family group for the purposes of the Trust under section 272-95 of the Income Tax Assessment Act 1936 (ITAA 1936) ?