Tax Law Improvement Act 1997 (121 of 1997)

Schedule 5   Trading stock (and some related matters)

Part 3   Consequential amendment of the Income Tax Assessment Act 1936

63   Subsection 46(7A)

Repeal the subsection, substitute:

(7A) Subsection (7B) applies if:

(a) a shareholder that is a company elects to value an item of trading stock in a particular way under section 70-45 of the Income Tax Assessment Act 1997; and

(b) that value is greater than it would have been if the shareholder had elected to value the item in a different way; and

(c) the shareholder made the actual election for the purpose, or for purposes including the purpose, of increasing the rebate to which the shareholder would be entitled under subsection (2) or (2A), or the rebate that might be allowed to the shareholder under subsection (3).

(7B) In calculating the rebate, the following are determined as if the shareholder had instead elected to value the item at the lowest amount at which the shareholder could have elected to value it under section 70-45 of the Income Tax Assessment Act 1997:

(a) the part of any dividends (except PDF dividends) included in the shareholder’s taxable income;

(b) the part of any private company dividends included in the shareholder’s taxable income;

(c) the part of any PDF dividends included in the shareholder’s taxable income.