It has become common practice to make family trust and interposed entity elections to deal with carry forward losses and franked distributions without considering the impact on the future of the group.

This paper addresses the operation of the family trust regime providing an overview of what is a family trust election (FTE) and an interposed entity election (IEE); how to make them; and importantly, the implications and consequences of making an election. Through that analysis, it will be evident how an incorrect decision or nomination of test individual could affect the options of the group in the future.

The paper also addresses the role of FTEs and IEEs in an evolving and developing business, different entity structures, blended families, and the implications of the choice of test individual in respect of the growth of a privately controlled business.

This paper is intended to be practical whilst still addressing technical issues. Not all the detail in these materials will be covered during the presentation.

This paper focuses primarily on discretionary trusts. The trust vehicle most often encountered by practitioners.

In these materials, ITAA 36 is a reference to the Income Tax Assessment Act 1936 (Cth) and ITAA 97 is a reference to the Income Tax Assessment Act 1997 (Cth).

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