Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-F - Special provisions relating to ownership by non-fixed trusts  

SECTION 165-220   Special alternative to change of ownership test for Subdivision 165-B  

165-220(1)    
If the company does not meet the condition in paragraph 165-35(a) , it is nevertheless taken to meet the condition if it meets the conditions in this section.

First condition

165-220(2)    
At all times during the income year:


(a) both:


(i) persons must have held *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 company; or


(b) both:


(i) a *fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, 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.


Second condition

165-220(3)    


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



Third condition

165-220(4)    
At the beginning of the income year:


(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.



Fourth condition

165-220(5)    


It must be the case that, for each *non-fixed trust (other than an *excepted trust) that, at any time in the income year, held directly or indirectly a *fixed entitlement to a share of the income or capital of the company, section 267-60 in Schedule 2F to the Income Tax Assessment Act 1936 does not require the non-fixed trust to work out its net income and *tax loss for the income year under Division 268 .
Note:

See section 165-245 for when an entity is taken to have held or had, directly or indirectly, a fixed entitlement to a share of income or capital of a company.



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