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  

When the rules in this Subdivision do not apply

SECTION 166-280   Controlled test companies  

166-280(1)  
A *tracing rule does not modify how the ownership tests in section 166-145 apply to the tested company in respect of all or part of the voting power in the tested company, or all or some of the rights to *dividends of, or capital in, the tested company, if:


(a) either:


(i) an entity (the controlling entity ) directly holds that power or has those rights; or

(ii) an entity (the controlling entity ) indirectly holds that power or has those rights through one or more interposed entities; and


(b) the tested company is sufficiently influenced (within the meaning of paragraph 318(6)(b) of the Income Tax Assessment Act 1936 ) by the controlling entity.

Note:

However, a tracing rule can modify how the ownership tests in section 166-145 apply to the tested company in respect of voting power or dividend or capital rights held by entities other than controlling entities.

166-280(2)  
A *tracing rule does not modify how the ownership tests in section 166-145 apply to the tested company in respect of all or part of the voting power in the tested company if:


(a) the tested company is a *widely held company; and


(b) that voting power:


(i) is more than 25% of the total voting power in the tested company and is controlled (whether directly, or indirectly through one or more interposed entities) by a natural person, together with his or her *associates; or

(ii) is more than 50% of the total voting power in the tested company and is controlled (whether directly, or indirectly through one or more interposed entities) by a trustee or company, together with its associates.

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