Private ruling: Family Trust Elections
Published: January 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Q1: Are the Trustees of Trust A able to make an Interposed Entity Election (IEE) to be included in the family group of the specified individual of Trust B? | A1: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Trust A is a discretionary trust. The Trustees of Trust A have the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust. The specified individual of Trust B is a part of the same family as the Trustees of Trust A as defined in subsection 272-95(1) of the ITAA 1936 It is proposed that distributions will be made from Trust B to Trust A. In the event that such distributions are made it is proposed that an IEE would be made effective from the beginning of the relevant financial year and subsequent years by The Trustees of Trust A in relation to Trust B.

Relevant legislative provisions: Income Tax Assessment Act 1936 Schedule 2F | Income Tax Assessment Act 1936 Schedule 2F Section 272-85 | Income Tax Assessment Act 1936 Schedule 2F Section 272-87

Reasons for decision: Summary: A FTE makes the trust a family trust for taxation purposes. When a trustee has made a family trust election, the trustee of any other trust may make an IEE to be included in the family group of the individual specified in the FTE if they aren't already part of the family group. The requirements for making interposed entity election are contained in section 272-85 of Schedule 2F of the ITAA 1936. The trustee of any other trust may make an IEE to be included in the family group of the individual specified in the family trust election of the family trust after a specified day in a specified income year. Section 272-87 of Schedule 2F of ITAA 1936 lists the requirements for passing the family control test. A trust in respect of an interposed entity election is proposed to be made passes the family control test if the specified individual and/or one or more members of the specified individual's family has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust. Trust A passes the family control test under section 272-87of Schedule 2F of ITAA 1936 and can make an interposed entity election in relation to Trust B

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