INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 7 - Private companies  

SECTION 105AAB   DIVIDEND MAY BE TAKEN INTO ACCOUNT WHERE COMPANY CARRIES ON SAME BUSINESS  

105AAB(1)   [Same business test]  

Subject to subsection (2), where -

(a) an amount paid in a dividend by a private company during the first 2 months of the period that is the prescribed period in relation to the year of income, other than a dividend paid on the last day of that period of 2 months, would not, but for this section, by reason of a change that has taken place in the beneficial ownership of shares in the company or in any other company, be taken into account in ascertaining whether the company is deemed to have made a sufficient distribution in relation to the year of income;

(b) the first-mentioned company carried on at all times during the part of that period of 2 months that followed the day on which the amount was paid the same business as it carried on immediately before the change referred to in paragraph (a) took place; and

(c) the first-mentioned company did not, at any time during that part of that period of 2 months, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change took place,

subsections 105A(5), (7) and (9) and section 105AAA do not prevent the amount from being so taken into account.

105AAB(2)   [New business before ownership change]  

Subsection (1) does not apply in respect of an amount paid in a dividend by a private company during the first 2 months of the period that is the prescribed period in relation to the year of income if -

(a) before the change referred to in that subsection took place, the company commenced to carry on a business that it had not previously carried on, or entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and

(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of securing that an amount that the company had paid, or might pay, in a dividend would be taken into account by virtue of subsection (1), in whole or in part, in ascertaining whether the company is deemed to have made a sufficient distribution in relation to the year of income.