Published on 05 May 06
by SOUTH AUSTRALIAN DIVISION, THE TAX INSTITUTE
The tests for making use of trust losses have proved to be very effective in restricting or moderating their use and so great care is needed by the tax adviser to ensure that where trust losses could be properly used, all the conditions are met. This paper uses case studies to highlight the problem areas in satisfying the tests and to suggest tactics to deal with the problems. The paper also contains an overview of the trust loss provisions for reference. The case studies deal with problem areas in the following areas:
correctly identifying a fixed trust
rixed interests and the Commissioner’s discretion
family trust and interposed entity elections
the tests (50% stake, control, pattern of distribution and income injection).
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