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  

Stakes held directly and/or indirectly by widely held companies

SECTION 166-245   Stakes held by other entities  

166-245(1)  
This section modifies how the ownership tests in section 166-145 are applied to the tested company if:


(a) an entity mentioned in subsection (2) directly or indirectly (through one or more interposed entities) holds a *voting stake, a *dividend stake or a *capital stake in the company; and


(b) neither the entity nor another entity has, under section 166-225 , 166-230 or 166-240 , been taken to control voting power or have rights in respect of the stake; and


(c) the entity mentioned in subsection (2) satisfies the condition in subsection (3).

Note:

Other rules might affect this provision: see sections 166-272 , 166-275 and 166-280 .

166-245(2)  


For the purposes of subsection (1), these are the entities:


(a) a *superannuation fund; and


(b) an *approved deposit fund; and


(ba) (Repealed by No 70 of 2015)


(c) a *special company; and


(d) a *managed investment scheme; and


(e) any other entity, or entity of a kind, prescribed by the regulations.

166-245(3)  
For the purposes of paragraph (1)(c), an entity satisfies the condition in this subsection if at all times during the income year of the tested company in which the *ownership test time occurs:


(a) if the entity is a *superannuation fund:


(i) the fund is a *complying superannuation fund; or

(ii) the fund is a superannuation fund that is established in a foreign country and is regulated under a *foreign law; or


(b) if the entity is an *approved deposit fund - the fund is a *complying approved deposit fund; or


(ba) (Repealed by No 70 of 2015)


(c) if the entity is a *special company - the company is a special company; or


(d) if the entity is a *managed investment scheme:


(i) the scheme is registered under the Corporations Act 2001 ; or

(ii) the entity is recognised, under a *foreign law relating to corporate regulation, as an entity with a similar status to a managed investment scheme; or


(e) if the entity is an entity, or an entity of a kind, prescribed by the regulations - the entity meets any conditions prescribed by the regulations.

Note:

See section 165-255 for the rule about incomplete periods.

If the entity has 10 members or fewer

166-245(4)  
If the entity has 10 *members or fewer, the tests are applied to the tested company as if, at the *ownership test time:


(a) if the stake is a *voting stake - each member controls, or is able to control, an equal proportion of the voting power in the tested company that is carried by that stake at that time; and


(b) if the stake is a *dividend stake - each member had the right to receive (whether directly or *indirectly), for its own benefit, an equal proportion of any *dividends the tested company may pay in respect of that stake at that time; and


(c) if the stake is a *capital stake - each member had the right to receive (whether directly or indirectly), for its own benefit, an equal proportion of any distributions of capital of the tested company in respect of that stake at that time; and


(d) in any case - each member were a person (other than a company or a trustee).

Note 1:

If each member ' s proportion of the voting power, the dividends or the distributions is less than 10%, then subsections (5) and (6) apply instead.

Note 2:

The persons who actually control the voting power and have rights to dividends and capital are taken not to control that power or have those rights: see section 166-265 .

If the entity has more than 10 members etc.

166-245(5)  
The ownership tests are applied as set out in subsection (6) if:


(a) the entity has more than 10 *members; or


(b) under subsection (4):


(i) the proportion of the voting power in the company that each member controls, or is able to control, is less than 10% of the total voting power; or

(ii) the proportion of the *dividends that the tested company may pay for the benefit of each member is less than 10% of the total dividends; or

(iii) the proportion of the distributions of capital that the tested company may pay for the benefit of each member is less than 10% of the total distributions.

166-245(6)  
The ownership tests are applied to the tested company as if, at the *ownership test time:


(a) if the stake is a *voting stake - the entity controls, or is able to control, the voting power in the tested company that is carried by that stake at that time; and


(b) if the stake is a *dividend stake - the entity had the right to receive (whether directly or *indirectly), for its own benefit, any *dividends the tested company may pay in respect of that stake at that time; and


(c) if the stake is a *capital stake - the entity had the right to receive (whether directly or indirectly), for its own benefit, any distributions of capital of the tested company in respect of that stake at that time; and


(d) in any case - the entity were a person (other than a company or a trustee).

Note:

The persons who actually control the voting power and have rights to dividends and capital are taken not to control that power or have those rights: see section 166-265 .


 

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