Document ID: chunk:federal_register_of_legislation:C2025C00014:schedule:2f:p3
Version: federal_register_of_legislation:C2025C00014
Segment Type: schedule
Provision Reference: sch 2F (pt 3/79)
Character Range: 2217014–2219470

debt/equity swap relating to the whole or part of a debt; and
 (b) was a fixed trust at all times in the period (the test period):
 (i) if the debt was incurred in an earlier income year—beginning on the day the debt was incurred and ending at the end of the income year; or
 (ii) if the debt was incurred in the income year—consisting of the income year; and
 (c) was not a widely held unit trust at all times in the test period; and
 (d) was not an excepted trust at all times in the test period.
Note: Subdivisions 709‑D and 719‑I of the Income Tax Assessment Act 1997 also affect when a trust that used to be a member of a consolidated group or MEC group may deduct a debt that used to be owed to a member of the group and that the trust writes off as bad.

Condition for deducting amount
 (2) The trust cannot deduct the amount unless it meets either:
• the condition in section 266‑40; or
• the conditions in section 266‑45.

266‑40  The trust must pass 50% stake test
  The fixed trust must pass the 50% stake test for the test period.
To find out whether the trust passes the 50% stake test for the period: see Subdivision 269‑C.

266‑45  The trust must meet non‑fixed trust stake test
 (1) If the condition in section 266‑40 is not met, the trust must satisfy the conditions in this section.

First condition
 (2) At all times during the test period:
 (a) non‑fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the trust; or
 (b) both:
 (i) a fixed trust or a company (which trust or company is the holding entity) must have held, directly or indirectly, all of the fixed entitlements to income and capital of the trust; and
 (ii) non‑fixed trusts (other than family trusts) must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.

Second condition
 (3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
 (a) in a paragraph (2)(a) case—the trust; or
 (b) in a paragraph (2)(b) case—the holding entity;
at the beginning of the test period must have held those entitlements to those shares at all times during the test period.

Third condition
 (4) At the beginning of the test period:
 (a) individuals must not have had more than a 50% stake in the income of the trust; or