Family Trust Election- do you need to make one?
27 June, 2022

Family Trust Election- do you need to make one?

If you have a family trust structure, you need to consider if it is appropriate to make a family trust election.

A family trust election (“FTE”) is a choice by a trustee to specify a particular individual (the test individual) around whom a family group is formed.

The family group formed as such then sets the maximum range of beneficiaries amongst whom the trustee can distribute income without triggering significant adverse tax outcomes, such as family trust distributions tax.

The making of an FTE will enable the trustee to pass franking credits on to beneficiaries and more easily offset prior year losses against the trust’s taxable income.

The choice as to who will be the test individual is crucial, as not all family members will be part of the ‘family group’ for tax purposes.

If your family trust receives franked dividends or has tax losses, the trustee should consider the option of making a family trust election (FTE) in order to access certain tax concessions.

However, FTE may not be appropriate in all instances there may be the risk of incurring FTDT if a distribution is made to a beneficiary outside of the family group.

If you have any questions about family trust elections, please contact us.
 

Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.

Please contact us for advice specific to you and your circumstances.

Blog

Related Blogs

July 15, 2024
BY Bibek Nepal, CPA
Announced in the 2024 Federal budget, the ATO will have additional time to review suspected fraud...
July 12, 2024
BY Bibek Nepal, CPA
Making time to look over your financial reports each month is an important task for any business ...
July 7, 2024
BY Bibek Nepal, CPA
The beginning of a new financial year is an excellent time to review the financial year just fini...
July 5, 2024
BY Bibek Nepal, CPA
Some important tax changes for 30 June 2024 that you need to be aware of for your business. Sk...
June 30, 2024
BY Bibek Nepal, CPA
Some important tax changes for 30 June 2024 for you to review opportunities available to you this...
June 25, 2024
BY Bibek Nepal, CPA
As 30 June 2024 is fast approaching, we have prepared this document to provide you with some tax ...
June 25, 2024
BY Bibek Nepal, CPA
As 30 June 2024 is fast approaching, we have prepared this document to provide your business with...