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-CC - Change of ownership or control of company that has an unrealised net loss  

Operative provisions

SECTION 165-115C   Changeover time - change in ownership of company  

165-115C(1)  
A time (the test time ) is a changeover time in respect of a company if:


(a) persons who had *more than 50% of the voting power in the company at the reference time do not have more than 50% of that voting power immediately after the test time; or


(b) persons who had rights to *more than 50% of the company ' s dividends at the reference time do not have rights to more than 50% of those dividends immediately after the test time; or


(c) persons who had rights to *more than 50% of the company ' s capital distributions at the reference time do not have rights to more than 50% of those distributions immediately after the test time.

Note 1:

See section 165-150 to work out who had more than 50% of the voting power in the company.

Note 2:

See section 165-155 to work out who had rights to more than 50% of the company ' s dividends.

Note 3:

See section 165-160 to work out who had rights to more than 50% of the company ' s capital distributions.

Note 4:

For reference time see subsection 165-115A(2A) .

Note 5:

Division 167 has special rules for working out rights to voting power, dividends and capital distributions in a company whose shares do not all carry the same rights to those matters.

165-115C(2)  
To work out whether paragraph (1)(a), (b) or (c) applied at a particular time, apply the primary test unless subsection (3) requires the alternative test to be applied.

Note:

For the primary test see subsections 165-150(1) , 165-155(1) and 165-160(1) .

165-115C(3)  


Apply the alternative test if one or more other companies beneficially owned *shares or interests in shares in the company at any time during the period from the reference time to the *test time.
Note:

For the alternative test see subsections 165-150(2) , 165-155(2) and 165-160(2) .

165-115C(4)  
A *test time that would, apart from this subsection, be a changeover time in respect of the company because of the application of subsection (1) is taken not to be a changeover time if:


(a) that subsection would not have applied except for the operation of section 165-165 ; and


(b) the company has information from which it would be reasonable to conclude that less than 50% of the company ' s unrealised net loss at the test time has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any *direct equity interests or *indirect equity interests in the company during the period from the reference time to the test time.

165-115C(4A)  


If the company is:


(a) a *non-profit company; or


(b) a *mutual affiliate company; or


(c) a *mutual insurance company;

during the whole of the period from the reference time to the *test time, the test time is taken not to be a *changeover time in respect of the company because of the application of paragraphs (1)(b) and (c).

165-115C(5)  


The happening of any *CGT event in relation to a *direct equity interest or *indirect equity interest in the company that results in the time of the happening of the event being a changeover time in respect of the company is taken, for the purposes of paragraph (4)(b), to have occurred during the period referred to in that paragraph.

165-115C(6)  
(Repealed by No 143 of 2007 )

165-115C(7)  
(Repealed by No 143 of 2007 )


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