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-E - Concessional tracing rules  

Stakes of less than 10% in the tested company

SECTION 166-225   Direct stakes of less than 10% in the tested company  

166-225(1)  


This section modifies how the ownership tests in section 166-145 are applied to the tested company if:


(a) a *voting stake that carries rights to less than 10% of the voting power in the company is held directly in the company; or


(b) a *dividend stake that carries the right to receive less than 10% of any dividends that the company may pay is held directly in the company; or


(c) a *capital stake that carries the right to receive less than 10% of any distribution of capital of the company is held directly in the company.

Note 1:

Other rules might affect this provision: see sections 166-270 , 166-275 and 166-280 .

Note 2:

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.

Notional shareholder

166-225(2)  


The tests are applied to the tested company as if, at the *ownership test time, a single notional entity:


(a) directly controlled the voting power that is carried by each such *voting stake; and


(b) had the right to receive, for its own benefit and directly:


(i) any *dividends the tested company may pay in respect of each such *dividend stake; and

(ii) any distributions of capital of the tested company in respect of each such *capital stake; and


(c) were a person (other than a company).

Note:

The persons who actually control the voting power and have rights to dividends and capital are taken not to control that power or have those rights: see section 166-265 .

166-225(3)  
To avoid doubt, the single notional entity mentioned in subsection (2) is a different single notional entity from the one mentioned in section 165-207 and the one mentioned in section 166-255 .


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