THE Australian Tax Office has released the first in this new series of practice statements dealing with Family Trust Elections.
The practice statement offers a one-off opportunity to enable family entities to lodge, as part of their 2004 tax return, a Family Trust Election and/or interposed entity election that was required to have been lodged with a previous year’s return.
In coming to this view the ATO is recognising that at the time the law was introduced to require the lodgement of these elections, many other aspects of change in the tax system affected taxpayer and tax practitioner workloads.
The practice statement sets out the conditions of the opportunity – that is, that it is only available to entities that have in fact acted as if they were a family entity.
In other words, an entity will satisfy this requirement if, at all times from the beginning of the specified year of income until June 30 2004:
p The entity passes the family control test; and
p The entity has made no distributions of income or capital to persons other than the individual specified in the election or members of that individual’s family group.
The practice statement applies to trusts electing to be family trusts for the purpose of:
The trust loss measures;
The company loss measures; or
The franking credit trading measures.
This is a demonstration of a sensible administration of the law by the commissioner.
Michelle Saunders, principal Entrepreneurial Services
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