Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-30 - SUPERANNUATION  

Division 295 - Taxation of superannuation entities  

Subdivision 295-H - Components of taxable income  

SECTION 295-550   Meaning of non-arm ' s length income  

295-550(1)  


An amount of *ordinary income or *statutory income is non-arm ' s length income of a *complying superannuation fund, a *complying approved deposit fund or a *pooled superannuation trust if, as a result of a *scheme the parties to which were not dealing with each other at *arm ' s length in relation to the scheme, one or more of the following applies:


(a) the amount of the income is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm ' s length in relation to the scheme;


(b) in gaining or producing the income, the entity incurs a loss, outgoing or expenditure of an amount that is less than the amount of a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm ' s length in relation to the scheme;


(c) in gaining or producing the income, the entity does not incur a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm ' s length in relation to the scheme.

This subsection does not apply to an amount to which subsection (2) applies or an amount *derived by the entity in the capacity of beneficiary of a trust.

295-550(2)  
An amount of *ordinary income or *statutory income is also non-arm ' s length income of the entity if it is:


(a) a *dividend paid to the entity by a *private company; or


(b) ordinary income or statutory income that is reasonably attributable to such a dividend;

unless the amount is consistent with an *arm ' s length dealing.

295-550(3)  
In deciding whether an amount is consistent with an *arm ' s length dealing under subsection (2), have regard to:


(a) the value of *shares in the company that are assets of the entity; and


(b) the cost to the entity of the shares on which the *dividend was paid; and


(c) the rate of that dividend; and


(d) whether the company has paid a dividend on other shares in the company and, if so, the rate of that dividend; and


(e) whether the company has issued any shares to the entity in satisfaction of a dividend paid by the company (or part of it) and, if so, the circumstances of the issue; and


(f) any other relevant matters.

295-550(4)  
Income *derived by the entity as a beneficiary of a trust, other than because of holding a fixed entitlement to the income, is non-arm ' s length income of the entity.

295-550(5)  


Other income *derived by the entity as a beneficiary of a trust through holding a fixed entitlement to the income of the trust is non-arm ' s length income of the entity if, as a result of a *scheme the parties to which were not dealing with each other at *arm ' s length in relation to the scheme, one or more of the following applies:


(a) the amount of the income is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm ' s length in relation to the scheme;


(b) in acquiring the entitlement or in gaining or producing the income, the entity incurs a loss, outgoing or expenditure of an amount that is less than the amount of a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm ' s length in relation to the scheme;


(c) in acquiring the entitlement or in gaining or producing the income, the entity does not incur a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm ' s length in relation to the scheme.

295-550(6)  
This section:


(a) applies to a *non-share equity interest in the same way as it applies to a *share; and


(b) applies to an *equity holder in a company in the same way as it applies to a shareholder in the company; and


(c) applies to a *non-share dividend in the same way as it applies to a *dividend.

295-550(7)  


Paragraphs (1)(b) and (c) and (5)(b) and (c) apply to a loss, outgoing or expenditure whether or not it is of capital or of a capital nature.

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