| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012437434734
Disclaimer
You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.
The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.
The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.
Ruling
Subject: Same business test
Question 1
Will Company A's acquisition of Company B result in Company A satisfying the same business test in section 165-210 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
This ruling applies for the following period:
1 July 2012 to 30 June 2013
The scheme commences on:
1 July 2012
Relevant facts and circumstances
The Applicant applied for a Private Binding Ruling (the Application) on behalf of Company A. The Applicant advises that Company A proposes to acquire Company B. The Application seeks a ruling on the application of same business test in section 165-210 of the ITAA 1997.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 165-A
Income Tax Assessment Act 1997 Subdivision 165-E
Income Tax Assessment Act 1997 Section 165-10
Income Tax Assessment Act 1997 Section 165-12
Income Tax Assessment Act 1997 Section 165-13
Income Tax Assessment Act 1997 Section 165-210
Income Tax Assessment Act 1997 Division 166
Income Tax Assessment Act 1997 Section 166-5
Reasons for decision
Section 165-210 provides the required conditions that need to be met for the same business test to be satisfied:
165-210(1) A company satisfies the same business test if throughout the *same business test period it carries on the same *business as it carried on immediately before the *test time.
165-210(2) However, the company does not satisfy the *same business test if, at any time during the *same business test period, it *derives assessable income from:
(a) a *business of a kind that it did not carry on before the *test time; or
(b) a transaction of a kind that it had not entered into in the course of its business operations before the *test time.
165-210(3)The company also does not satisfy the *same business test if, before the *test time, it:
(a) started to carry on a *business it had not previously carried on; or
(b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into;
and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the *same business test period the same business as it carried on immediately before the test time.
As paragraph 33 of TR 1999/9 states, whether the same business is carried on is a question of fact:
In Avondale Motors, Gibbs J said:
'The question whether a company has commenced a new business or has continued an old business under different conditions is simply one of fact.'
Having regard to the relevant facts, it is considered that the actual business carried on by Company A at the test time is the same business carried on by Company A in the income year ending 30 June 2013. This is so notwithstanding the acquisition of Company A.
Accordingly, Company A satisfies the same business test in subsection 165-210(1) of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
