INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 235 - Particular financial transactions  

Subdivision 235-I - Instalment trusts  

Operative provisions

SECTION 235-835   Requirement for underlying investments to be listed or widely held  

235-835(1)  
A trust satisfies the requirements in this section if:


(a) each asset that is, or is part of, the underlying investment is:


(i) a *share, a unit in a unit trust or a stapled security; or

(ii) an interest in an entity that holds an interest in a share, a unit in a unit trust or a stapled security either directly, or indirectly through one or more interposed entities; and


(b) each such share, unit or stapled security:


(i) is listed for quotation in the official list of an *approved stock exchange; or

(ii) meets the widely held requirement set out in the applicable item of the following table.


Widely held requirements
Item Column 1
Type of asset
Column 2
Widely held requirement
1 A *share in a company The company is a *widely held company
2 A unit in a unit trust The unit trust is a widely held unit trust as defined in section 272-105 in Schedule 2F to the Income Tax Assessment Act 1936
3 A stapled security All companies involved are *widely held companies and all trusts involved are such widely held unit trusts

235-835(2)  
A *share, unit in a unit trust or a stapled security that fails the widely held requirement set out in the table in subsection (1) is treated as satisfying that requirement if the failure:


(a) is of a temporary nature only; and


(b) is caused by circumstances outside the investor ' s control.

235-835(3)  
In applying subsection (1), disregard an asset, or the cash proceeds from disposing of an asset, if:


(a) the trustee became entitled to the asset in respect of a *share, unit or stapled security that was, or was part of, the underlying investment just before the entitlement arose; and


(b) the asset is not a *share, unit in a unit trust, or stapled security; and


(c) if the asset is an interest in an entity, or a right, option or similar interest that gives the holder an entitlement to acquire an interest in an entity:


(i) an interest in the entity is listed for quotation in the official list of an *approved stock exchange; or

(ii) the entity meets a widely held requirement set out in column 2 of item 1 or 2 of the table in subsection (1); and


(d) the underlying investment comprises one or more other assets that are not disregarded under this subsection.

Example:

Examples of the types of assets disregarded by this subsection are:

  • (a) assets that represent distributions and capital payments in respect of the underlying investment; and
  • (b) bonus rights issued in respect of the underlying investment.
  • 235-835(4)  
    Despite subsections (1) to (3), the underlying investment does not satisfy the requirement in this section if an asset that is, or is part of, the underlying investment is an *ESS interest to which Subdivision 83A-B or 83A-C (about employee share schemes) applies.


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