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 166-235   Voting, dividend and capital stakes  

Meaning of voting stake

166-235(1)  


An entity holds a voting stake in a company if:


(a) the entity is the registered holder of *shares in the company; and


(b) the shares carry rights to exercise voting power in the company.

166-235(2)  


An entity (the stakeholder ) also holds a voting stake in a company if:


(a) one or more other entities are interposed between the company and the stakeholder; and


(b) the stakeholder controls, or is able to control, voting power in the company indirectly through the interposed entity or entities.

Note:

For working out the size of a voting stake (for example, for paragraph 166-225(1)(a) ), 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.

Meaning of dividend stake

166-235(3)  
An entity holds a dividend stake in a company if:


(a) the entity is the registered holder of *shares in the company; and


(b) the shares carry rights to all or any *dividends that the company may pay.

166-235(4)  
An entity (the stakeholder ) also holds a dividend stake in a company if:


(a) one or more other entities are interposed between the company and the stakeholder; and


(b) the stakeholder has the right to receive, for its own benefit and *indirectly through the interposed entity or entities, all or any *dividends that the company may pay.

Note:

For working out the size of a dividend stake (for example, for paragraph 166-225(1)(b) ), Subdivision 167-A has special rules for a company whose shares do not all carry the same rights to dividends.

Meaning of capital stake

166-235(5)  
An entity holds a capital stake in a company if:


(a) the entity is the registered holder of *shares in the company; and


(b) the shares carry rights to all or any of a distribution of capital of the company.

166-235(6)  
An entity (the stakeholder ) also holds a capital stake in a company if:


(a) one or more other entities are interposed between the company and the stakeholder; and


(b) the stakeholder has the right to receive, for its own benefit and *indirectly through the interposed entity or entities, all or any of a distribution of capital of the company.

Note:

For working out the size of a capital stake (for example, for paragraph 166-225(1)(c) ), Subdivision 167-A has special rules for a company whose shares do not all carry the same rights to capital distributions.

Stakes held by nominees

166-235(7)  
For the purposes of sections 166-225 and 166-230 , if:


(a) an entity (the nominee entity ) holds a *voting stake, a *dividend stake, or a *capital stake, in a company; and


(b) the nominee entity is itself a company; and


(c) the nominee entity holds the stake as a nominee for more than one other entity;

then, for each entity for whom a part of the stake is held by the nominee entity, that entity ' s part of the stake may be treated instead as a separate stake.


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