Guide to the loss recoupment rules

Tracing rule 5: Stakes in the company held indirectly by way of bearer shares in an interposed foreign listed company - section 166-255

An indirect stake in the company held by way of bearer shares in a foreign listed company that is interposed between the bearer shareholders and the company is attributed to a single notional entity in certain circumstances.

This tracing rule applies to indirect stakes held in the company by way of bearer shares in an interposed foreign listed company. No tracing of the bearer shareholders is required if all the following conditions are satisfied:

• There is a foreign listed company interposed between the bearer shareholders and the company at the ownership test time.
• At all times during the relevant income year, the principal class of shares in the foreign listed company is listed on an approved stock exchange. The principal class of shares are either ordinary or common shares that represent the majority of the voting power and value of the company.
• At the ownership test time, the bearer shares must represent a stake of 50% or more of the voting power, rights to dividends or capital distributions of the foreign listed company.
• The beneficial owners of the bearer shares have not been disclosed to the foreign listed company. If a beneficial owner of bearer shares has been disclosed to the foreign listed company, their bearer shares are excluded from this tracing rule.
• No other tracing rule concession has applied.

This tracing rule is subject to the minimum interests rule.

Sections within The modified continuity of ownership test and the same business test

• When does the modified COT apply from?
• What companies are eligible for the modified COT?
• What are the ownership testing requirements?
• What are the modified COT tracing rules?
• What is meant by a voting, dividend or capital stake in a company?
• Tracing rule 1: Direct stakes of less than 10% in the company - section 166-225
• Tracing rule 2: Indirect stakes of less than 10% in the company - section 166-230
• Tracing rule 3: Direct and/or indirect stakes of between 10% and 50% (inclusive) held by a widely held company in the company - section 166-240
• Tracing rule 4: Stakes held in the company by certain other entities- section 166-245
• Tracing rule 5: Stakes in the company held indirectly by way of bearer shares in an interposed foreign listed company - section 166-255
• Tracing rule 6: Stakes in the company held indirectly by a depository entity as a shareholder of an interposed foreign listed company - section 166-260
• The minimum interests rule - section 166-270
• The no detriment rule - section 166-275
• The same share same interest rule - section 166-272
• The controlled companies rule - section 166-280