The Government has also confirmed that it will reduce the scope for family trusts to be used to lower income tax by utilising losses. The Government will change the definition of family in the family trust election rules to limit lineal descendants to children or grandchildren of the test individual or of the test individual’s spouse. This will have effect from 1 July 2008.This measure will also preclude family trusts making a once-off variation to the test individual specified in a family trust election (other than in relation to a marriage breakdown). This will have effect from the 2007-08 income year.
For a copy of the Assistant Treasurer's media release, No 2008/34, 13 May 2008, go here