Relevant legislations
Enquiry:
My discretionary trust wishes to make a family trust election for 2017/18 financial year. The ‘Test Individual’ chosen is me. I have the following family members and related entities:
- My husband: John
- My sons: Mark and Mike
- My sister: Mia
- Mia’s daughter: Nina
- My father and mother: Adam and Esther
- My cousin: Rachel
- My former husband: Jerry
- My brother-in-law (Jon’s brother): Nick
- ABC Pty Ltd: A company which is 50% owned by Helen and 50% by Rachel (Helen’s cousin)
Could you advise me which family members/entities would be excluded from the family group given I am the ‘test individual’?
Explanation:
The test individual your family group include your family, specified former family members, entities covered by an interposed entity election (IEE) and entities owned by your family (ITAA36 Sch 2F s 272-90). Therefore, your cousin Rachel is excluded as cousins do not fall within the definition of ‘family group’ in s272-90.
ABC Pty Ltd is also excluded as the family members do not have an entitlement to all of the capital and income of the entity, also, interposed entity election has not been made.
Note: If the specified individual divorces after being legally married, their former spouse won't be a member of the family. However, the former spouse will remain a member of the family group. Thus, the former spouses are generally members of the family group for the purpose of determining whether a conferral or distribution is made.