Income Tax Assessment Act 1936
(Repealed by No 101 of 2006)
View history note
Hide history noteS 46A(5B) amended by No 101 of 2006 ; inserted by No 93 of 1999.
S 46A repealed by No 101 of 2006, s 3 and Sch 3 item 6, effective 1 January 2008. S 46A formerly read:
dividend
Definition of
"
dividend
"
substituted by No 163 of 2001.
SECTION 46A REBATE ON DIVIDENDS PAID AS PART OF DIVIDEND STRIPPING OPERATION
46A(1)
In this section:
:
(a)
means a dividend paid by a company that is a resident; and
(b)
does not, except in paragraph (6)(a) or (b), include a dividend unless the payment of the dividend arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping; and
(c)
does not include a dividend paid in respect of a non-equity share in the company.
"life assurance company"
(Repealed by No 89 of 2000)
Definition of " life assurance company " inserted by No 120 of 1995.
"non-fund component"
(Repealed by No 62 of 1997)
Definition of " non-fund component " inserted by No 120 of 1995.
PDF dividend
means a dividend paid to a shareholder that is a PDF.
Definition of " PDF dividend " inserted by No 181 of 1994.
private company dividend
, in relation to a shareholder that is a private company in relation to the year of income, means a dividend paid to the shareholder by another company, being a company that is a resident and is a private company in relation to the year of income of that other company in which the dividend was paid.
SME income component
has the same meaning as in Subdivision
B
of Division
10E
.
Definition of " SME income component " inserted by No 181 of 1994.
standard component
(Repealed by No 89 of 2000)
Definition of " standard component " inserted by No 62 of 1997.
"the insurance funds"
(Repealed by No 89 of 2000)
Definition of " the insurance funds " inserted by No 120 of 1995.
S 46A(1) substituted by No 51 of 1986 and amended by No 108 of 1981 and No 51 of 1973.
46A(1AA)
This section does not apply to a PDF dividend if the dividend is paid in respect of an unregulated investment (within the meaning of the Pooled Development Funds Act 1992 ).
S 46A(1AA) inserted by No 181 of 1994.
46A(1A)
The dividends that:
(a) are paid to a shareholder in the year of income commencing on 1 July 1986 or a subsequent year of income; and
(b) apart from this subsection, would be private company dividends;
shall be taken for the purposes of this section to be private company dividends only to the extent of the amount of phasing-out dividends included in the distributable income of the shareholder of the year of income concerned for the purposes of Division 7 .
S 46A(1A) inserted by No 62 of 1987.
46A(2)
This section does not apply in relation to a dividend paid in respect of shares in a company (in this section referred to as the " relevant company " ) unless the shareholder acquired (whether alone or jointly with another person or other persons) property, being:
(a) those shares;
(b) other shares in the relevant company;
(c) shares in another company that, at the time of acquisition of the shares in that other company or at any time after the time of acquisition of the shares in that other company and before the time when the dividend was paid, was related to the relevant company; or
(d) a beneficial interest in a trust estate, being a trust estate that, at the time of acquisition of the beneficial interest or at any time after the time of acquisition of the beneficial interest and before the time when the dividend was paid, was related to the relevant company;
and any of the following paragraphs applies:
(e) the property was acquired as trading stock;
(f) the property was acquired in such circumstances that:
(i) any profit that would arise from a disposal of the property would, in whole or in part, be included in the assessable income of the shareholder; or
(ii) any loss that would arise from a disposal of the property would, in whole or in part, be allowable as a deduction to the shareholder;
(g) the property was acquired on or after 20 September 1985.
S 46A(2) amended by No 108 of 1987 and No 51 of 1986; substituted by No 172 of 1978.
46A(3)
In considering whether the payment of a dividend (in this subsection referred to as the " relevant dividend " ) by the relevant company arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping, the Commissioner shall take into consideration:
(a) whether the effect of the payment of the relevant dividend by the relevant company to the shareholder, or the effect of that payment and of the payments of any other dividends that have been or are likely to be made by the relevant company to the shareholder has been, or would be, to reimburse the shareholder wholly or substantially for the amount or amounts paid by him in respect of the acquisition of any relevant property;
(b) whether the value of any relevant property immediately after the time when the relevant dividend was paid was substantially less than the value of that relevant property at the time when it was acquired by the shareholder and, if so, whether the reduction in value was wholly or mainly attributable to the payment of a dividend to the shareholder by the relevant company;
(c) whether the right to receive dividends in respect of any relevant property consisting of shares in the relevant company is, by reason of any provision in the constituent document of the company or of any agreement, limited as to the total of the amounts that may be paid as dividends in respect of the shares or as to the source of the profits from which, or the period during which, dividends may be paid in respect of the shares; and
(d) any other relevant matters.
S 46A(3) substituted by No 172 of 1978.
46A(3A)
If this section applies to a shareholder that is a company that must work out its taxable income for the year of income under Subdivision 165-B (Working out the taxable income and tax loss for the income year of the change) of the Income Tax Assessment Act 1997 , this section applies to the shareholder as if:
(a) that Subdivision did not apply to the shareholder; and
(b) the shareholder were instead required to work out its taxable income under section 4-15 (How to work out your taxable income) of that Act.
S 46(3A) inserted by No 39 of 1997.
46A(4)
(Repealed by No 51 of 1986)
46A(5)
Subject to this section, a shareholder, being a company that is a resident, is entitled to a rebate in its assessment in respect of income of the year of income of the amount obtained by applying the average rate of tax payable by the shareholder:
(a) if the shareholder is a private company in relation to the year of income, to the sum of:
(i) one-half of the net income derived from private company dividends (other than PDF dividends) by the shareholder; and
(ii) the net income derived from other dividends (other than PDF dividends) by the shareholder; and
(b) if the shareholder is not a private company in relation to the year of income, to the net income derived from dividends (other than PDF dividends) by the shareholder.
S 46A(5) amended by No 181 of 1994.
46A(5A)
Subject to this section, if:
(a) one or more PDF dividends were paid in a year of income to a shareholder; and
(b) the shareholder is a resident;
the shareholder is entitled to a rebate in its assessment in respect of income of the year of income. The amount of the rebate is obtained by applying the rate of tax payable by the shareholder in respect of the SME income component of its taxable income to the net income derived from PDF dividends by the shareholder.
S 46A(5A) inserted by No 181 of 1994.
46A(5B)
A shareholder is not entitled to a rebate under subsection (5) or (5A) in respect of a dividend unless the shareholder is a qualified person in relation to the dividend for the purposes of former Division 1A of Part IIIAA .
S 46A(5B) amended by No 101 of 2006 , s 3 and Sch 2 item 212, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .
S 46A(5B) inserted by No 93 of 1999.
46A(6)
Subject to the succeeding provisions of this section, the Commissioner may allow a shareholder, being a company that is a private company in relation to the year of income and is a resident, a further rebate in its assessment of the amount obtained by applying the average rate of tax payable by the shareholder to one-half of the net income derived from private company dividends by the shareholder if the Commissioner is satisfied that:
(a) the shareholder has not paid, and will not pay, a dividend during the period commencing at the beginning of the year of income of the shareholder and ending at the expiration of 10 months after that year of income to another private company;
(b) where the shareholder has paid, or may pay, a dividend during the period:
(i) commencing at the beginning of the year of income of the shareholder; and
to a company, being a private company in relation to the year of income of the company in which the dividend was, or may be, paid, the company has not paid, and will not pay, a dividend during the period;
(ii) ending at the expiration of 10 months after that year of income,
(iii) commencing at the beginning of the year of income of the company in which the dividend has been, or may be, paid by the shareholder; and
to another private company; or
(iv) ending at the expiration of 10 months after that year of income,
(c) having regard to all the circumstances, it would be reasonable to allow the further rebate.
S 46A(6) amended by No 108 of 1981.
46A(6A)
If:
(a) the shareholder mentioned in subsection (5) or (6) is a life assurance company; and
(b) the sum mentioned in paragraph (5)(a), or the net income derived from dividends mentioned in paragraph (5)(b) or subsection (6), is greater than that part of the life assurance company ' s taxable income in respect of the relevant year that is attributable to shareholders ' funds income of the year of income;
the reference to the sum or the net income is taken instead to be a reference to the amount of that part of the life assurance company ' s taxable income in respect of the relevant year that is attributable to shareholders ' funds income of the year of income.
S 46A(6A) substituted by No 89 of 2000; amended by No 62 of 1997 and No 120 of 1995.
46A(7)
Where, after the Commissioner has allowed a shareholder, being a company that is a private company in relation to a year of income and is a resident, a further rebate in its assessment in pursuance of subsection (6), the Commissioner becomes satisfied that, having regard to all the circumstances, the rebate ought not to have been allowed, the shareholder shall be deemed not to have been entitled to the rebate.
S 46A(7) amended by No 108 of 1981.
46A(8)
For the purposes of subsections (5) and (6), but subject to subsection (8AA), the average rate of tax payable by a shareholder for a year of tax shall be deemed to be an amount per dollar being the amount ascertained by dividing the amount of income tax that would be assessed in respect of the taxable income derived by the shareholder in the year of income if:
(a) the shareholder was not entitled to any rebate of tax or credit against its liability to tax; and
(b) the shareholder was not liable to pay any tax under Division 7 ;
by a number equal to the number of whole dollars in that taxable income.
S 46A(8) amended by No 120 of 1995 and No 51 of 1973.
46A(8AA)
For the purposes of subsections (5) and (6), the average rate of tax payable for a year of tax by a shareholder that is a life assurance company is the rate of tax applicable under section 23A of the Income Tax Rates Act 1986 for the year of income in respect of the ordinary class of the life assurance company ' s taxable income.
S 46A(8AA) amended by No 143 of 2007 , s 3 and Sch 7 item 10, by substituting " section 23A " for " sections 23A and 23B " , effective 24 September 2007.
S 46A(8AA) substituted by No 89 of 2000; amended by No 62 of 1997 and inserted by No 120 of 1995.
46A(8A)
(Repealed by No 39 of 1997)
S 46A(8A) inserted by No 172 of 1978.
46A(8B)
(Repealed by No 39 of 1997)
S 46A(8B) inserted by No 172 of 1978.
46A(9)
For the purposes of subsections (5) and (6):
(a) the net income derived from dividends by a shareholder is the amount remaining after deducting from the amount of the dividends included in the assessable income of the shareholder of the year of income the deductions allowed or allowable to the shareholder under this Act in respect of those dividends; and
(b) the net income derived from private company dividends by a shareholder, being a company that is a private company in relation to the year of income, is the amount remaining after deducting from the amount of the private company dividends included in the assessable income of the shareholder of the year of income:
(i) any deductions allowed or allowable to the shareholder under this Act in respect of the dividends included in the assessable income of the shareholder of the year of income, being deductions that relate exclusively to the private company dividends; and
(ii) so much of any other deductions allowed or allowable to the shareholder under this Act in respect of the dividends included in the assessable income of the shareholder of the year of income as the Commissioner is satisfied it is reasonable to attribute to the private company dividends.
S 46A(9) amended by No 51 of 1973.
46A(9A)
For the purposes of subsection (5A), the net income derived from PDF dividends by a shareholder is the amount remaining after deducting from the amount of the PDF dividends included in the assessable income of the shareholder of the year of income the deductions allowed or allowable to the shareholder under this Act in respect of those dividends.
S 46A(9A) inserted by No 181 of 1994.
46A(10)
For the purposes of subsections (9) and (9A), the deductions allowed or allowable to a shareholder under this Act in respect of particular dividends included in the assessable income of the shareholder of the year of income are:
(a) any deductions allowed or allowable to the shareholder under this Act in relation to the year of income or any other year of income, being deductions that related or relate exclusively to any of those dividends; and
(b) so much of any other deductions (including deductions, whether in respect of losses, outgoings or otherwise, that are not specifically related to particular income or to income included in a particular class of income) allowed or allowable to the shareholder under this Act in relation to the year of income or any other year of income as the Commissioner is satisfied it is reasonable to attribute to those dividends.
S 46A(10) amended by No 181 of 1994 and No 108 of 1981.
46A(10A)
For the purposes of subsection (10), the Commissioner may be satisfied that it is reasonable to attribute to dividends paid to a shareholder in respect of shares in a company deductions that have been allowed or are allowable to the shareholder under this Act in relation to a year of income notwithstanding that those deductions relate to the acquisition of relevant property other than relevant property consisting of the shares in the relevant company in respect of which the dividends were paid.
S 46A(10A) amended by No 139 of 1997 and substituted by No 172 of 1978.
46A(10B)
Subsections (11) and (12) do not apply to relevant property acquired by a shareholder on or after 20 September 1985.
S 46A(10B) inserted by No 108 of 1987.
46A(11)
For the purposes of the application of subsections (10) and (10A) in determining the deductions that have been allowed or are allowable to a shareholder under this Act in respect of any dividends included in the assessable income of the shareholder of a year of income, where any profit arising from a transaction, undertaking or scheme that involved the acquisition by the shareholder (whether alone or jointly with another person or other persons) of relevant property, has been or is included in the assessable income of the shareholder of a year of income (in this subsection referred to as the " relevant year of income " ):
(a) any expenditure incurred by the shareholder in respect of the acquisition of that relevant property; and
(b) any other expenditure incurred by the shareholder in connection with the transaction, undertaking or scheme, being expenditure that was, or is to be, taken into account in ascertaining the amount of that profit;
shall be deemed to have been a deduction allowed, or to be a deduction allowable, as the case may be, to the shareholder under this Act in relation to the relevant year of income.
S 46A(11) amended by No 39 of 1997 and substituted by No 172 of 1978.
46A(12)
For the purposes of the application of subsections (10) and (10A) in determining the deductions that have been allowed or are allowable to a shareholder under this Act in respect of any dividends included in the assessable income of the shareholder of a year of income, where any loss incurred in respect of a transaction, undertaking or scheme that involved the acquisition by the shareholder (whether alone or jointly with another person or other persons) of relevant property, has been allowed or is allowable as a deduction to the shareholder under this Act in relation to a year of income (in this subsection referred to as the " relevant year of income " ):
(a) any expenditure incurred by the shareholder in respect of the acquisition of that relevant property; and
(b) any other expenditure incurred by the shareholder in connection with the transaction, undertaking or scheme, being expenditure that was, or is to be, taken into account in ascertaining the amount of that loss;
shall be deemed to have been a deduction allowed, or to be a deduction allowable, as the case may be, to the shareholder under this Act in relation to the relevant year of income, but the amount of the loss shall, for the purposes of those subsections, be deemed not to have been a deduction allowed, or not to be a deduction allowable, as the case may be, to the shareholder under this Act in relation to the relevant year of income.
S 46A(12) amended by No 39 of 1997 and substituted by No 172 of 1978.
46A(12A)
For the purposes of the application of subsections (10) and (10A) in determining the deductions that have been allowed or are allowable to a shareholder under this Act in respect of any dividends included in the assessable income of the shareholder of a year of income (in this subsection called the " current year of income " ), where relevant property was acquired by the shareholder (otherwise than as trading stock) on or after 20 September 1985, the following provisions have effect:
(a) whichever of the following amounts is applicable shall be deemed to have been a deduction allowable to the shareholder under this Act in relation to the current year of income:
(i) if a CGT event happened in relation to the relevant property before the end of the current year of income:
(A) the cost base to the shareholder of the relevant property ascertained as at the time of the event; orwhichever is the greater;
(B) if subsection (11) or (12) would, apart from subsection (10B), apply in relation to the relevant property in relation to the current year of income - the expenditure referred to in the subsection concerned;
(ii) in any other case:
(A) the cost base to the shareholder of the relevant property, ascertained as at the end of the current year of income; orwhichever is the greater;
(B) if subsection (11) or (12) would, apart from subsection (10B), apply in relation to the relevant property in relation to the current year of income - the expenditure referred to in the subsection concerned;
(b) whichever of the following amounts is applicable shall be deemed to have been a deduction allowable to the shareholder under this Act in relation to a subsequent year of income:
(i) if a CGT event happens in relation to the relevant property during the subsequent year of income:
(A) the cost base to the shareholder of the relevant property, ascertained as at the time of the event; orwhichever is the greater, reduced by the amount, or the sum of the amounts, applicable under this subsection in respect of the relevant property in relation to one or more earlier years of income;
(B) if subsection (11) or (12) would, apart from subsection (10B), apply in relation to the relevant property in relation to the subsequent year of income or in relation to the subsequent year of income and one or more earlier years of income - the expenditure, or the sum of the expenditures, referred to in the subsection or subsections concerned;
(ii) in any other case:
(A) the cost base to the shareholder of the relevant property, ascertained as at the end of the subsequent year of income; orwhichever is the greater, reduced by the amount, or the sum of the amounts, applicable under this subsection in respect of the relevant property in relation to one or more earlier years of income.
(B) if subsection (11) or (12) would, apart from subsection (10B), apply in relation to the relevant property in relation to the subsequent year of income or in relation to the subsequent year of income and one or more earlier years of income - the expenditure, or the sum of the expenditures, referred to in the subsection or subsections concerned;
S 46A(12A) amended by No 46 of 1998, No 39 of 1997, and inserted by No 108 of 1987.
Former s 46A(12A) omitted by No 172 of 1978 and inserted by No 57 of 1978.
46A(12BA)
If there was a roll-over under Division 122 , 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J , 124-K or 124-L of that Act) for a CGT event that resulted in a shareholder acquiring relevant property, then, for the purposes of subsection (12A), the property ' s cost base to the shareholder is worked out as if the shareholder had acquired the property for what would, but for the roll-over, have been its cost base for the purpose of working out the amount of a capital gain arising from the event.
S 46A(12BA) inserted by No 46 of 1998.
46A(12B)
For the purposes of subsection (12A), where, by virtue of Division 17 of Part IIIA , that Part does not apply in respect of the disposal that resulted in the acquisition of relevant property by a shareholder, the cost base to the shareholder of the relevant property shall be determined as if the shareholder had paid as consideration in respect of the acquisition of the relevant property an amount equal to the amount that would have been the cost base to the transferor concerned of the relevant property for the purposes of that Part if that Part had applied in respect of the disposal of the relevant property to the shareholder.
S 46A(12B) inserted by No 108 of 1987.
Former s 46A(12B) omitted by No 172 of 1978 and inserted by No 57 of 1978.
46A(12C)
(Repealed by No 46 of 1998)
S 46A(12C) inserted by No 108 of 1987.
S 46A(13) repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 61, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
46A(13A)
For the purposes of this section -
(a) a company shall be taken to be related to the relevant company at any time if, and only if, at that time, a reduction in the value of any shares in the relevant company could reasonably be expected to result in a reduction in the value of any shares in the first-mentioned company; and
(b) a trust estate shall be taken to be related to the relevant company at any time if, and only if, at that time, a reduction in the value of any shares in the relevant company could reasonably be expected to result in a reduction in the value of any of the property of the trust estate.
S 46A(13A) inserted by No 172 of 1978.
46A(13B)
Unless the contrary intention appears -
(a) a reference in this section to a share shall be read as including a reference to -
(i) an interest in a share; and
(ii) a right or option (including a contingent right or option) to acquire a share or an interest in a share; and
(b) a reference in this section to a beneficial interest in a trust estate shall be read as including a reference to a right or option (including a contingent right or option) to acquire a beneficial interest in a trust estate.
S 46A(13B) inserted by No 172 of 1978.
46A(13C)
Subject to subsection (13CA), for the purposes of this section, a person who acquires shares or a beneficial interest in a trust estate in pursuance of an agreement shall be taken to have acquired the shares, or the beneficial interest, as the case may be, at the time when the agreement was entered into.
S 46A(13C) amended by No 108 of 1987; inserted by No 172 of 1978.
46A(13CA)
For the purposes of this section, the question whether property was acquired on or after 20 September 1985 shall be determined in the same manner as the question when a CGT asset was acquired is determined for the purposes of the Income Tax Assessment Act 1997 .
S 46A(13CA) amended by No 46 of 1998 and inserted by No 108 of 1987.
46A(13D)
For the purposes of the application of this section in relation to a dividend paid to a shareholder in respect of shares in the relevant company, " relevant property " means:
(a) the shares in respect of which the dividend was paid;
(b) other shares in the relevant company that were acquired by the shareholder (whether alone or jointly with another person or other persons) at any time before the time when the dividend was paid;
(c) shares in another company that were acquired by the shareholder (whether alone or jointly with another person or other persons) at any time before the time when the dividend was paid, being another company that was, at the time of acquisition of the shares in that other company or at any time after the time of acquisition of the shares in that other company and before the time when the dividend was paid, related to the relevant company; or
(d) a beneficial interest in a trust estate that was acquired by the shareholder (whether alone or jointly with another person or other persons) at any time before the time when the dividend was paid, being a trust estate that was, at the time of acquisition of the beneficial interest or at any time after the time of acquisition of the beneficial interest and before the time when the dividend was paid, related to the relevant company.
S 46A(13D) inserted by No 172 of 1978.
46A(13E)
A reference in this section to an agreement shall be read as including a reference to an agreement that is not enforceable by legal proceedings, whether or not it was intended to be so enforceable.
S 46A(13E) inserted by No 172 of 1978.
46A(13F)
For the purposes of this section, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.
S 46A(13F) inserted by No 172 of 1978.
46A(14)
Notwithstanding anything in any other provision:
(a) (Omitted by No 46 of 1986)
(b) the Commissioner may amend an assessment at any time for the purpose of taking into account, under subsections (9) and (10), a deduction that has been allowed, or is allowable, to a shareholder in relation to a year of income subsequent to the year of income to which the assessment relates; and
(c) the Commissioner may amend an assessment at any time for the purpose of taking into account an acquisition of shares or a beneficial interest in a trust estate by a person that, by virtue of subsection (13C), is deemed to have taken place before the end of the year of income to which the assessment relates,
but nothing in this subsection limits the power of the Commissioner to amend an assessment in accordance with any other provision of this Act.
S 46A(14) amended by No 39 of 1997, No 46 of 1986, No 108 of 1981 and No 172 of 1978.
46A(15)
A shareholder in a company that is a co-operative company within the meaning of Division 9 is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by that company.
S 46A(15) amended by No 51 of 1973.
46A(16)
A shareholder in a company is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by the company if the income of the company is exempt from tax under:
(a) Division 1AB of this Part; or
(b) item 1.1, 1.2, 1.3 or 1.4 of the table in section 50-5 , section 50-15 or 50-25 or item 6.1 or 6.2 of the table in section 50-30 of the Income Tax Assessment Act 1997 .
S 46A(16) substituted by No 121 of 1997, amended by No 169 of 1995 and added by No 95 of 1988.
Former s 46A(16) omitted by No 49 of 1985, amended by No 51 of 1973.
46A(17)
If:
(a) a dividend is paid by the company to a shareholder that is a life assurance company; and
(b) the assets of the life assurance company from which the dividend was derived were included in the insurance funds of the life assurance company at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
(ii) ends at the time when the dividend was paid;
the life assurance company is not entitled to a rebate under this section in its assessment in respect of the dividend unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company ' s shareholders.
S 46A(17) substituted by No 89 of 2000; inserted by No 105 of 1989.
Former s 46A(17) repealed by No 80 of 1975; inserted by No 165 of 1973.
46A(18)
(Repealed by No 120 of 1995)
S 46A(18) inserted by No 105 of 1989.
46A(19)
A shareholder in a capacity of trustee is not, and is taken never to have been, entitled to a rebate under this section.
S 46A(19) inserted by No 35 of 1992.
46A(20)
Subsection (19) does not apply to the trustee of:
(a) a corporate unit trust within the meaning of Division 6B ; or
(b) a public trading trust within the meaning of Division 6C .
S 46A(20) inserted by No 35 of 1992.
S 46A inserted by No 47 of 1972.
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