Hi - a few really dumb questions.
I understand that a Discretionary Trust cannot carry forward losses to subsequent years unless it satisfies the Family Trust Election (FTE). If FTE is made it can then carry forward income losses internally, to be offset against future profits.
The FTE does not seem to cause any problems - as it would probably be the people you would want to be able to distribute to anyway.
However, if you want to be able to distribute to other trusts, those other trusts need to have made the Interposed Entity Election (ITE).
My question is do these other trusts have to be formed and have made the ITE at the time when the first trust makes the FTE?
Or can you establish a DT, make the FTE for that trust, then - say 5 years later - form a new DT under the same family control and make the ITE for this new trust at this stage, and be able to (i) carry forward losses (if any) in the first trust and (ii) distribute any profits (if any) from the first trust to the newly established trust, without penalty???
One additional question, w.r.t the FTE - does the Test Person have to have a spouse or children/grandchildren/etc.. at the time of the FTE, or are they automatically picked up later if they come into existence?
Thanks.
I understand that a Discretionary Trust cannot carry forward losses to subsequent years unless it satisfies the Family Trust Election (FTE). If FTE is made it can then carry forward income losses internally, to be offset against future profits.
The FTE does not seem to cause any problems - as it would probably be the people you would want to be able to distribute to anyway.
However, if you want to be able to distribute to other trusts, those other trusts need to have made the Interposed Entity Election (ITE).
My question is do these other trusts have to be formed and have made the ITE at the time when the first trust makes the FTE?
Or can you establish a DT, make the FTE for that trust, then - say 5 years later - form a new DT under the same family control and make the ITE for this new trust at this stage, and be able to (i) carry forward losses (if any) in the first trust and (ii) distribute any profits (if any) from the first trust to the newly established trust, without penalty???
One additional question, w.r.t the FTE - does the Test Person have to have a spouse or children/grandchildren/etc.. at the time of the FTE, or are they automatically picked up later if they come into existence?
Thanks.
