Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 170 - Treatment of certain company groups for income tax purposes  

Subdivision 170-D - Transactions by a company that is a member of a linked group  

Operative provisions

SECTION 170-260   Linked group  

170-260(1)  
Companies that are linked to one another are a linked group .

170-260(2)  
Two companies are linked to each other if:


(a) one of them has a controlling stake in the other; or


(b) the same entity has a controlling stake in each of them.

170-260(3)  
For the purposes of this section, an entity has a controlling stake in a company at a particular time if the entity, or the entity and the entity ' s *associates between them:


(a) are able at that time to exercise, or control the exercise of, more than 50% of the voting power in the company (either directly, or indirectly through one or more interposed entities); or


(b) have at that time the right to receive for their own benefit (either directly, or indirectly through one or more interposed entities) more than 50% of any dividends that the company may pay; or


(c) have at that time the right to receive for their own benefit (either directly, or indirectly through one or more interposed entities) more than 50% of any distribution of capital of the company.

Note:

Division 167 has special rules for working out rights to voting power, dividends and capital distributions in a company whose shares do not all carry the same rights to those matters.

170-260(4)  
If:


(a) apart from this subsection, an interest that gives an entity and its *associates (if any):


(i) the ability to exercise, or control the exercise of, any of the voting power in a company; or

(ii) the right to receive dividends that a company may pay; or

(iii) the right to receive a distribution of capital of a company;
would, in the application of paragraph (3)(a), (b) or (c), be counted more than once; and


(b) the interest is both direct and indirect;

only the direct interest is to be counted.


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