In this course you will consider the trust loss tests that apply to fixed and non-fixed trusts, the eligibility conditions a trustee must satisfy in making a family trust election and the application of family trust distribution tax to distributions made to members outside an elected family group.

This course sets out the three most common reasons a trustee may choose to lodge a family trust election, the need to preserve: 

  • a trust’s tax losses
  • a subsidiary company’s tax losses
  • the franking credit entitlements of the beneficiaries of a discretionary trust

By the end of this course you should be able to weigh up the relative advantages and disadvantages of a trustee making a family trust election.  

Reference is also made to the continuity of ownership test in carrying forward tax losses of a company which is 50% or more owned by a non-fixed trust, and the application of the 45 day holding period rule to beneficiaries of a discretionary trust receiving franking credits.

You will also consider alternate strategies that may be available to retain trust losses, a subsidiary company’s tax losses and franking credit entitlements without making a family trust election.

Key topics:

  • Trust loss rules
  • Loss rules for non-fixed trusts and fixed trusts
  • Subsidiary company loss rules
  • Franking credits of discretionary beneficiaries
  • Eligibility to elect
  • Family trust distribution tax
  • Advantages and disadvantages of making a family trust election

This one hour online course forms part of the FastClass short course suite.

Learning objectives

  • Identify when the trustee of a trust must lodge a family trust election to carry forward and utilise trust losses, and the different rules that apply to fixed and non-fixed trusts
  • Determine when a trustee of a discretionary trust must lodge a family trust election to ensure that a company which is 50% or more owned by a non-fixed trust can bring forward and recoup a tax loss where the company is directly or indirectly owned by a discretionary trust
  • Explain when a trustee of a discretionary trust will be required to lodge a family trust election in order to ensure beneficiaries can obtain franking credits on franked distributions
  • Apply the family trust election rules to enable a trustee of a trust to preserve trust losses, a subsidiary company’s tax losses and a beneficiary’s entitlement to franking credits
  • Explain the eligibility conditions that must be met by a trustee seeking to make a family trust election
  • Analyse the advantages and disadvantages of making a family trust election, including the application of family trust distribution tax where distributions are made outside the family group

Audience

This course is for tax practitioners with responsibility for the preparation of income tax returns and businesses involving trusts.

This course is based on the Australian taxation system.

1 hour

365 Days

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