Family Trust Election and Interposed Entity Election

Issuing authority

Australian Taxation Office

Official source

How to apply

1. Determine whether the trust needs an FTE — it is required to access the trust loss provisions, certain CGT concessions, or to distribute franking credits to non-residents without withholding tax complications.
2. Identify the 'specified individual' around whom the family group is defined — this person and their family members must receive all trust distributions or family trust distribution tax (FTDT) applies at the top marginal rate.
3. Download the current-year Family Trust Election, Revocation or Variation form (NAT 2787) from ato.gov.au — ensure you use the version for the relevant income year.
4. Complete Section A of NAT 2787: identify the trustee, trust name, TFN, and the specified individual.
5. Nominate the income year from which the election takes effect — the FTE can apply from any income year (including prior years) subject to conditions.
6. For related entities (companies, partnerships, other trusts) that need to receive distributions without triggering FTDT, complete the Interposed Entity Election form (NAT 2788).
7. Lodge NAT 2787 and/or NAT 2788 with the trust's tax return for the income year the election takes effect — attach to the Trust Tax Return (NAT 0660) or lodge separately via a registered tax agent.
8. Record the election status at the relevant labels in the Trust Tax Return each year the election remains in force — the election is binding and cannot easily be revoked.

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