INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 703 - Consolidated groups and their members  

Basic concepts  

SECTION 703-37   Disregarding certain preference shares following an ADI restructure  

703-37(1)  


The object of this section is to ensure that, following an *ADI restructure to which Part 4A of the Financial Sector (Transfer and Restructure) Act 1999 applies, a body corporate is not prevented from being a *subsidiary member of a *consolidated group or *consolidatable group just because the body (or another body corporate) has issued, or issues, certain preference *shares.

703-37(2)  
This Part (except Division 719 ) operates as if a body corporate that meets the requirement of subsection (3) at a particular time were a *wholly-owned subsidiary of another body corporate (the holding body ) at the time.

703-37(3)  
The body corporate (the preference-share issuing body ) must be one that would be a *wholly-owned subsidiary of the holding body at the time if the *shares in the preference share-issuing body that are to be disregarded under subsection (4) did not exist.

703-37(4)  
Disregard a *share in the preference-share issuing body if:


(a) a restructure instrument under Part 4A of the Financial Sector (Transfer and Restructure) Act 1999 is in force in relation to a non-operating holding company within the meaning of that Act; and


(b) because of the restructure to which the instrument relates, an *ADI becomes a subsidiary (within the meaning of that Act) of the non-operating holding company; and


(c) the preference share-issuing body is:


(i) the ADI; or

(ii) part of an extended licensed entity (within the meaning of the *prudential standards) that includes the ADI; and


(d) the shares are covered by subsection (5).

703-37(5)  
A *share is covered by this subsection if:


(a) the share is a preference share; and


(b) any *return on the share is fixed at the time of issue by reference to the amount subscribed; and


(c) the share is not a *voting share; and


(d) either:


(i) the share is Tier 1 capital (within the meaning of the *prudential standards); or

(ii) the share would be Tier 1 capital (within the meaning of the prudential standards) were it not for a limit, imposed by those standards, on the proportion of Tier 1 capital that can be made up of such shares.

703-37(6)  
Paragraph (5)(a) covers a preference share if it is issued:


(a) by itself; or


(b) in combination with one or more *schemes that are *related schemes in relation to a scheme under which a preference share is issued.

703-37(7)  
If subsection (5) has covered a *share, but would (apart from this subsection) stop covering the share from a particular time, then for a period of 180 days after that time the subsection is taken to continue to cover the share.


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