There is an apparent disconnect between the language of Item 1 in section 152-70, which requires an entity to hold a legal and equitable interest in the shares in a company, and Example 1.2 in the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 7) Bill 2006 - which introduced this section.
While Example 1.2 evidences a clear policy intention that a Trust (via its Trustee) can hold a direct small business participation percentage in a company, the actual language of Item 1 in section 152-70 requires the Trustee to hold a legal and equitable interest in the shares in a company - which the Trustee would not seem able to do, as it holds the shares on behalf of the beneficaries.
It would be preferable if this issue could be put beyond doubt by amending subsection 152-70(2) by adding (say) the following words "and regard a Trustee as holding both the legal and equitable interests in shares in the company."