Family Trust Election



Question :

The Wong Discretionary trust wishes to make a family trust election for 2017/18 financial year. The ‘test individual’ chosen is Helen Wong. Helen has the following family members and related entities: 

Her husband: John 

Her sons: Mark and Mike 

Her sister: Mia 

Mia’s daughter: Nina 

Her father and mother: Adam and Esther 

Her cousin: Rachel 

Her former husband: Jerry 

Her brother-in-law (Jon’s brother): Nick 

Wong Pty Ltd: A company which is 50% owned by Helen and 50% by Rachel (Helen’s cousin) 


Answer :

The test individual Helen’s family group include her family, specified former family members, entities covered by an interposed entity election (IEE) and entities owned by Helen’s family (ITAA36 Sch 2F s 272-90). Therefore, Helen’s cousin Rachel is excluded as cousins and does not fall within the definition of ‘family group’ in s272-90. Wong Pty Ltd is also excluded as the family members does not have an entitlement to all of the capital and income of the entity, nor an appropriate FTE or interposed entity election has 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.  

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