INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
Subject to this section, a taxpayer referred to in any of the following paragraphs may elect to have Subdivision BA of Division 7 apply to the taxpayer, in respect of a year of income specified in the election (the specified year of income ) and all later years of income, in relation to shares, or an interest in shares, managed by or on behalf of the taxpayer as or in a discrete fund (the managed fund ):
(a) the trustee of a unit trust that, at the time when the election is made, is a listed widely held trust (as defined in section 272-115 in Schedule 2F to the Income Tax Assessment Act 1936 ;
(b) the trustee of a unit trust that, at the time when the election is made, is an unlisted very widely held trust (as defined in section 272-120 in Schedule 2F to the Income Tax Assessment Act 1936 ;
(c) a life assurance company within the meaning of section 110 ;
(d) a general insurance company (as defined in subsection 121AB(4) );
(e) a friendly society;
(f) an organisation referred to in subparagraph 23(eb)(i) that only carries on business as a registered health benefits organisation within the meaning of the National Health Act 1953 ;
(g) the trustee of a fund (other than an excluded fund) that is a complying superannuation fund for the purposes of Part IX in relation to the specified year of income;
(h) the trustee of a fund (other than an excluded fund) that is a complying ADF for the purposes of Part IX in relation to the specified year of income;
(i) the trustee of a unit trust that is a pooled superannuation trust for the purposes of Part IX in relation to the specified year of income;
(j) a taxpayer who is declared by the regulations to be a taxpayer, or is included in a class of taxpayers who are declared by the regulations to be taxpayers, to whom this section applies in relation to the specified year of income;
(k) the trustee of a unit trust if, at the time when the election is made:
(i) at least 75% of the units are held by a person who is, or persons each of whom is, a person referred to in a preceding paragraph or a prescribed person in relation to the trust; and
(ii) all of the units carry the same rights; and
(iii) if the units are redeemable, they are redeemable for a price determined on the basis of the trust's net asset value, according to Australian accounting principles; and
(iv) the trust engages only in qualifying activities.
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A taxpayer referred to in any of paragraphs (1)(a) to (i) and (k) cannot make an election under subsection (1) if, under the regulations, the taxpayer is precluded from making such an election.160APHR(3) Election ineffective if related payments made.
(a) the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend or distribution; and
(b) the payment was or will be a payment of a prescribed kind. 160APHR(4) Prescribed kinds of payments.
(a) unless the regulations otherwise provide, the payment occurred or will occur pursuant to:
(i) an obligation under a securities lending arrangement (other than such an obligation to which section 160AQUA applies); or
(ii) an obligation under an arrangement of a kind known as an equity swap; or
(b) the payment is included in a class of payments declared by the regulations to be payments to which subsection (3) applies. 160APHR(5) Consequences of ineffective elections.
If an election under subsection (1) does not have any effect in respect of a particular dividend or distribution because of subsection (3), neither the share nor the interest in respect of which the dividend or distribution was made, nor the positions that the taxpayer has in relation to the share or interest, are to be taken into account in calculating the net equity exposure that the managed fund has in shares, or interests in shares, included in the fund for the purposes of section 160AQZH .160APHR(6) Commissioner's consent required for revocation of election.
An election under subsection (1) is irrevocable without the consent of the Commissioner.160APHR(7) Breach of condition of consent.
(a) the Commissioner consents to the revocation of an election subject to specified conditions; and
(b) the election is revoked but any of the conditions is breached;
the revocation of the election is taken not to have been made.160APHR(8) Taxpayer making election is a qualified person.
A taxpayer who makes an election under subsection (1) is a qualified person in relation to every dividend paid during a year of income to which the election applies on shares to which the election applies which are held by the taxpayer or in which the taxpayer has an interest.
If the Commissioner has made a determination under subsection 177EA(5) in respect of:
(a) a dividend paid in respect of shares held by a taxpayer; or
(b) a distribution that:
(i) was derived from a dividend paid in respect of shares; and
(ii) is made in respect of an interest held by a taxpayer in the shares;
the following paragraphs have effect:
(c) if the shares or interest is included in a discrete fund to which an election under subsection (1) relates - the Commissioner may determine that the election ceases or ceased to have effect from the beginning of the year of income in which the determination was made or from the beginning of a later year of income specified in the determination;
(d) if the shares or interest is not included in such a fund - the taxpayer is not entitled, without the consent of the Commissioner, to make an election under subsection (1).
A determination under this subsection has effect according to its terms.160APHR(10) Effect of entering into certain positions.
(a) an election made by a taxpayer under subsection (1) is in force in respect of the shares or interests in shares included in a discrete fund managed by or on behalf of the taxpayer; and
(b) the Commissioner informs the taxpayer that the Commissioner is of the opinion that:
(i) the taxpayer has entered into, or caused another person (for example, the asset overlay manager of the fund) on behalf of the taxpayer, to enter into; or
a position or positions that, apart from this subsection, would not be taken into account under subsection 160AQZH(2) for a purpose of materially diminishing risks of loss and opportunities for gain in respect of the shares or interests;
(ii) under an arrangement to which the taxpayer and an associate are parties, the associate has entered into;
the following provisions have effect:
(c) the short position or positions are to be taken into account under subsection 160AQZH(2) ;
(d) the Commissioner may determine that the election ceases or ceased to have effect from a time specified in the determination;
(e) if such a determination is made:
(i) the determination has effect according to its terms; and
(ii) the taxpayer is not entitled to make another election under subsection (1) without the consent of the Commissioner; and
(iii) if the Commissioner consents to the making of such an election subject to specified conditions and the election is made but any of the conditions is breached - the election is taken not to have been made.
In this section:
has the meaning given by subsection 10(1) of the Superannuation Industry Supervision Act 1993 .
(a) is an investment or business activity; and
(b) is conducted in accordance with the trust instrument or deed, and any prospectus, of the relevant trust; and
(c) is conducted at arm's length.
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