Effective from 1 July 2007, amendments have been made to the definition of 'family' in section 272-95 to allow for changes in beneficiaries of the trust over time. The definition is amended to also include lineal descendants of a nephew, niece or child of the test individual or the test individual's spouse.
For the purposes of determining the lineal descendants within the meaning of 'family' in section 272-95, an adopted child, step-child or ex-nuptial child of a person is to be taken into account.
In addition, distributions to the following continue to be exempt from FTD tax:
1> Div 50 (s23) exempt entities - charities and other bodies that are tax exempt.
2> Div 30 (s78) deductible entities - most DGR's
3> Wholly owned companies and fixed trusts of the test individual - Section 272-90(5)
4> Trusts with the same primary individual as is specified in its own FTE - section 272-90 (3A)
5> Trusts covered by an FTE - Section 272-90 (3)
Treatment of certain former family members
Any conferral of present entitlement to, or distributions of, income or capital of the trust are exempt from family trust distribution tax where the conferral is upon or the distribution is to a person who is a former spouse, a former widow/widower or a former stepchild. This is achieved by including these persons in the definition of 'family group' in section 272-90. Despite the fact that these persons are considered to be members of the test individual's family group, they are not included in the definition of 'family' under section 272-95.
A former spouse refers to a person who was a spouse of either the primary individual or a member of the primary individual's family before a breakdown in the marriage.
A former widow or widower is a person who was a widow or widower of either the primary individual or a member of the primary individual's family, and who has a new spouse that is not a member of the primary individual's family.
A former step-child is a person who was a step-child of either the primary individual or a member of the primary individual's family, before a breakdown in the marriage of the primary individual or the member of the primary individual's family.
A person does not cease to be a family member merely because of the death of any other family member.