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-B - Working out the taxable income, tax loss, net capital gain and net capital loss for the income year of the change  

SECTION 166-20   How Subdivisions 165-B and 165-CB apply to a widely held or eligible Division 166 company  

166-20(1)  
This Subdivision modifies how Subdivisions 165-B and 165-CB apply to a company that is:


(a) a *widely held company at all times during the income year (the test period ); or


(b) an *eligible Division 166 company at all times during the income year (the test period ); or


(c) a widely held company for a part of the income year and an eligible Division 166 company for the rest of the income year (the whole year being the test period ).

Note 1:

Subdivision 165-B is about when a company must calculate its taxable income and tax loss for the income year in a special way. Subdivision 165-CB is about when a company must calculate its net capital gain and net capital loss for the income year in a special way.

Note 2:

A company can choose that this Subdivision is not to apply to it: see section 166-35 .

Note 3:

See section 165-255 for the rule about incomplete test periods.

No corporate change etc.

166-20(2)  
If:


(a) no *corporate change in the company *ends at any time in the *test period; or


(b) a corporate change in the company *ends during the test period, but there is *substantial continuity of ownership as between the start of the test period and immediately after the corporate change ends;

the company is taken to have met the condition in paragraph 165-35(a) (which is about there being persons having *more than a 50% stake in it during the whole of the income year).

Note:

See sections 166-145 and 166-175 to work out whether there is substantial continuity of ownership and a corporate change.

Corporate change

166-20(3)  
If:


(a) a *corporate change in the company *ends at any time in the *test period; and


(b) there is no *substantial continuity of ownership as between the start of the test period and immediately after the corporate change ends;

then the company is taken to have failed to meet the condition in paragraph 165-35(a) .

Satisfies the business continuity test

166-20(4)  


However, if the company satisfies the *business continuity test for the rest of the income year (the business continuity test period ) after the first time (the test time ) in the *test period that a *corporate change in the company *ended, the company is taken to have satisfied the condition in paragraph 165-35(b) .
Note 1:

For the business continuity test, see Subdivision 165-E .

Note 2:

See section 165-255 for the rule about incomplete test periods.

166-20(5)  


Apply the *business continuity test to the *business that the company carried on immediately before the *test time.

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