INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 166 - Income tax consequences of changing ownership or control of a widely held or eligible Division 166 company  

Subdivision 166-D - Tests for finding out whether the widely held or eligible Division 166 company has maintained the same owners  

The ownership tests: substantial continuity of ownership

SECTION 166-145   The ownership tests: substantial continuity of ownership  

166-145(1)  
There is substantial continuity of ownership of the company as between the start of the *test period and another time in the test period if (and only if) the conditions in this section are met.

Note:

Section 166-165 , and Subdivision 166-E , affect how this section is applied.

Voting power

166-145(2)  


There must be persons (none of them companies or trustees) who had *more than 50% of the voting power in the company at the start of the *test period. Also, those persons must have had *more than 50% of the voting power in the company immediately after the other time in the test period.
Note 1:

To work out who had more than 50% of the voting power, see section 165-150 .

Note 2:

Subdivision 167-B has special rules for working out voting power in a company whose shares do not all carry the same voting rights, or do not carry all of the voting rights in the company.

Rights to dividends

166-145(3)  


There must be persons (none of them companies) who had rights to *more than 50% of the company ' s dividends at the start of the *test period. Also, those persons must have had rights to *more than 50% of the company ' s dividends immediately after the other time in the test period.
Note 1:

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

Note 2:

Subdivision 167-A has special rules for working out rights to dividends in a company whose shares do not all carry the same rights to dividends.

Rights to capital distributions

166-145(4)  


There must be persons (none of them companies) who had rights to *more than 50% of the company ' s capital distributions at the start of the *test period. Also, those persons must have had rights to *more than 50% of the company ' s capital distributions immediately after the other time in the test period.
Note 1:

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

Note 2:

Subdivision 167-A has special rules for working out rights to capital distributions in a company whose shares do not all carry the same rights to capital distributions.

When to apply the test

166-145(5)  
To work out whether a condition in this section was satisfied at a time (the ownership test time ), apply the alternative test for that condition.

Note:

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

Conditions in subsections (3) and (4) satisfied by non-profit and mutual companies

166-145(6)  
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 *test period, the conditions in subsections (3) and (4) are taken to have been satisfied by the company.


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