INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2A - Calculation of taxable income  

Subdivision B - Calculation of taxable income where disqualifying event occurs  

SECTION 50HA   CONTINUITY OF OWNERSHIP TESTS INAPPLICABLE IF COMPANY SATISFIES NON-FIXED TRUST OWNERSHIP TEST  

50HA(1)   [When s 50H(1)(a) to (c) do not apply]  

Paragraphs 50H(1)(a), (b) and (c) do not apply if the company satisfies the conditions in this section.

50HA(2)   First condition.  

At all times during the year of income:

(a) both:

(i) persons must have held fixed entitlements (see subsection (6)) to all of the income and capital of the company; and

(ii) non-fixed trusts (see subsection (6)), other than family trusts (see subsection (6)), must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or

(b) both:

(i) a fixed trust (see subsection (6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection (6)), fixed entitlements to all of the income and capital of the company; and

(ii) non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.

50HA(3)   Second condition.  

The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:

(a) in a paragraph (2)(a) case - the company; or

(b) in a paragraph (2)(b) case - the holding entity;

at the beginning of the year of income must have held those entitlements to those shares at all times during the year of income.

50HA(4)   Third condition.  

At the beginning of the year of income:

(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or

(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.

50HA(5)   Fourth condition.  

It must be the case that, for each non-fixed trust (other than an excepted trust as defined in subsection (6)) that, at any time in the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267-60 of Schedule 2F does not require the non-fixed trust to work out its net income and loss for the income year under Division 268 of Schedule 2F .

50HA(6)   Meaning of expressions.  

The expressions directly or indirectly, excepted trust, family trust, fixed entitlement, fixed trust and non-fixed trust have the same meanings as in Schedule 2F .