INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-A - What transfers into a company ' s share capital account does this Division apply to?  

SECTION 197-35   Exclusion for transfers made in connection with demutualisations of insurance etc. companies  

197-35(1)  
Subject to subsection (2), this Division does not apply to the transferred amount if:


(a) the amount is transferred in connection with the demutualisation of a company; and


(b) the demutualisation is implemented in accordance with a demutualisation method specified in Division 9AA of Part III of the Income Tax Assessment Act 1936 ; and


(c) the transfer occurs within the listing period in relation to the demutualisation (see subsection 121AE(6) of that Act); and


(d) the company (the issuing company ) to whose *share capital account the amount is transferred is:


(i) if the demutualisation method is the method specified in section 121AF or 121AG of the Income Tax Assessment Act 1936 - the demutualisation company; or

(ii) if the demutualisation method is the method specified in section 121AH , 121AI , 121AJ , 121AK or 121AL of the Income Tax Assessment Act 1936 - the company issuing the ordinary shares referred to in that section.

197-35(2)  
If the sum of:


(a) the transferred amount; and


(b) all amounts that were previously transferred to the issuing company ' s *share capital account, from another account of the company, in connection with the demutualisation; and


(c) all amounts that were previously transferred to the issuing company ' s retained profit account in connection with the demutualisation;

exceeds the listing day company valuation amount (see subsection (3)), subsection (1) does not stop this Division from applying to so much of the transferred amount as equals the lesser of the transferred amount and the amount of the excess.

Note:

If there are several transfers of amounts to the issuing company ' s share capital account, this section must be applied separately in relation to each transferred amount, in the order in which the transfers are made.

197-35(3)  
The listing day company valuation amount has the same meaning as it has for the purposes of table 1 in section 121AS of the Income Tax Assessment Act 1936 , as that table applies in relation to the demutualisation company (see note 3 to that table).


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