Issue
Can an entity make an interposed entity election (IEE), under section 272-85 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936), in respect of two family trusts where the individual specified in the respective Family Trust Elections (FTE) are different?
Decision
No, an entity can not make an IEE, under section 272-85 of Schedule 2F to the ITAA 1936, in respect of two family trusts where the individual specified in the respective FTEs are different.
Facts
The Unit Trust wants to be interposed into the family groups of the X Family Trust and the Y Family Trust.
Both the X family and Y family trusts are non-fixed trusts that have made FTEs which are in force.
Each family trust has specified a different individual in their respective FTE.
Reasons for Decision
Subsection 272-85(7) of Schedule 2F to the ITAA 1936 places a restriction on the making of multiple elections. Subsection 272-85(7) of Schedule 2F to the ITAA 1936, states:
The company, partners or trustee must not make an election under this section that the company, partnership or trust is to be included in the family group of the individual specified in the family trust election in respect of more than one trust, unless the individual specified in each of the family trust elections is the same.
This restricts entities that are able to make an IEE to only making multiple elections into family trusts that have the same individual specified. An entity covered by an IEE can only belong in one family group for the purpose of subsection 272-90(4) of Schedule 2F to the ITAA 1936 based on the one specified individual. Therefore, the two family trusts cannot both interpose the Unit Trust into their respective family groups as each family trust has a different specified individual.