Explanatory NotesAmendments to be moved by the Minister for Defence, the Honourable J.J. Dedman. (Including amendments previously circulated.)
Clause 9, page 9, at the end of the clause add the following sub-clause:- (2.)
Sub-clause (2.) is being enacted for application to those companies-
- the shares of which (other than preference shares) were during the year ended 30th June, 1948, quoted in the official list of a stock exchange; and
- the shares of which carrying 75 per centum or more of the voting power were, at the 30th June, 1948, beneficially held by or held directly or indirectly on behalf of or for the benefit of twenty or less persons.
In these cases, the companies would be subject to tax as private companies, in respect of income of the year ended 30th June, 1948, if sub-clause (2.) of clause 9 were not enacted. It is proposed by sub-clause (2.) that the question whether, in respect of that year, such a company is to be subject to tax as a private company or as a non-private company is to be determined by reference to paragraph (a) of sub-section (2.) of section 103 of the Income Tax Assessment Act 1936-1947. That paragraph provides, in effect, that a company shall be deemed to be a company in which the public are substantially interested if-
- shares of the company (other than preference shares) carrying not less than 25 per centum of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the year of income beneficially held by the public (not including a private company); and
- any such shares have in the course of that year, been quoted in the official list of a stock exchange.
If a company in respect of the year ended 30th June, 1948, is a company in which the public were substantially interested as defined in paragraph (a) of sub-section (2.) of the Income Tax Assessment Act 1936-1947, it will not be subject to tax as a private company on income derived during that year.
The purpose of sub-clause (2.) of clause 9 is to preserve to companies, the ordinary shares of which were, in the course of the year of income ended 30th June, 1948, quoted in the official lists of stock exchanges, all the rights to be taxed as non-private companies in respect of that year that those companies would have had if the amendments proposed by the Bill were not enacted.
In respect of the year ending 30th June, 1949, and subsequent years, however, it is proposed that the question whether the company is a company in which the public are substantially interested will be determined according to the defined meaning of that expression in clause 9 of the Income Tax Assessment Bill.