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Family Trust Elections and Interposed Entity Elections


Family Trust Elections (FTEs) and Interposed Entity Elections (IEEs) emerged from the trust loss rules announced in the 1995 Federal Budget, and as they originally only applied to trust losses, very few trusts were affected and hence few FTEs and IEEs were made and lodged with the Australian Taxation Office (ATO). Recently, renewed interest in what was thought to be largely settled law caused professional bodies including the Taxation Institute of Australia and the Institute of Chartered Accountants in Australia to petition the Government to express their members' concerns relating to these complex provisions of the Act.

In response, the ATO issued Practice Statement PS LA 2004/1 (GA) on 15 April 2004, which applies to trusts which have elected to be family trusts for the purposes of the trust loss measures, company loss measures or the franking credit trading measures.

In light of these developments, it is both timely and important to revisit FTEs and IEEs and critically examine whether the ATO's Practice Statement represents an adequate response to the stated concerns. The Article seeks to undertake this examination and is structured in a practical question-and-answer format that will examine not only the theoretical issues but also, and more importantly, it will focus on the practical issues.

Author profile

Prof Dale Pinto CTA-Life
Photo of author, Dale PINTO Dale Pinto is currently a Professor of Taxation Law in the Curtin Law School at Curtin University. He is the 2018 President of the Divisional Council of CPA Australia (WA Division) and is also a Fellow of CPA Australia, a Fellow of the Australian Academy of Law and is a Chartered Accountant, Chartered Tax Adviser and Life Member of the Tax Institute. Dale is the author/co-author of numerous books, refereed articles and national and international conference papers, and is on the editorial board of a number of peer-reviewed journals as well as being the Editor-in-Chief of several refereed journals. Dale is the Chair of the Tax Institute's National Education Quality Assurance Board and is a member of TEQSA's Expert Panel in Accounting and Taxation. Dale served as an inaugural member of the National Tax Practitioners Board and is a current member of the Board of Taxation's Advisory Panel and the ATO's Tax Technical Panel (Superannuation), as well as the Tax Institute's Technical Committees (Superannuation, Not-for-Profit Organisations and Large Business and International). - Current at 16 February 2018
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