Income Tax Assessment Act 1997
The company may debit the whole or a part of a *non-share distribution against the company ' s *non-share capital account:
(a) to the extent to which the distribution is made as consideration for the surrender, cancellation or redemption of a *non-share equity interest in the company; or
(b) to the extent to which:
(i) the distribution is made in connection with a reduction in the *market value of a non-share equity interest in the company; and
(ii) the amount of the distribution is equal to the amount of the reduction in market value.
The total of the amounts debited to the account in respect of a particular *non-share equity interest must not exceed the total of the amounts credited to the account in respect of the interest. 164-20(3)
(a) an *equity interest in the company changes at a particular time (the change time ) to a *debt interest in the company because of subsection 974-110(1) or (2) ; or
(b) an equity interest in the company changes to a debt interest in the company, with effect from a time (the change time ) that is the start of a particular income year, because of subsection 974-110(1A) ; or
(c) the following conditions are satisfied in relation to an interest in the company:
(i) subsection 974-75(6) does not apply to the interest in relation to a particular income year;
(ii) the interest is an equity interest in the company at the end of that income year;
(iii) subsection 974-75(6) applies to the interest from the time (the change time ) that is the start of the next income year;
there is, or is taken to have been, a debit to the *non-share capital account at the change time equal to:
|Credits in relation to the interest||-||Debits in relation to the interest|
To avoid doubt, if:
(a) it appears that a debit to the company ' s *non-share capital account has arisen because an interest in the company appears to be, or have become, a *debt interest at a time in a particular income year; and
(b) because subsection 974-75(6) or 974-110(1A) is subsequently found not to apply in relation to the interest and that income year, the interest was not in fact, or did not in fact become, a debt interest at that time;
the debit referred to in paragraph (a) is taken never to have arisen.
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