INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 20 - Changes in majority underlying interests in assets  

Subdivision E - How holdings of shares or units of less than 1% in certain public entities may be treated  

SECTION 160ZZSM   NOTIONAL SINGLE SHAREHOLDER OR UNITHOLDER  

160ZZSM(1)   Application.  

The head company or the head trust may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the head company or of the head trust at the base time and at a test time.

160ZZSM(2)   Notional shareholder or unitholder of head company or head trust.  

Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may be determined as if a single notional natural person (the notional holder ) had the right to receive, for the person's own benefit and directly:

(a) in respect of a determination in relation to an asset of the head company:

(i) any distributions of capital of the head company in respect of each capital shareholding of less than 1% in the company at each such time; and

(ii) any dividends the head company may pay in respect of each dividend shareholding of less than 1% in the company at each such time; and

(b) in respect of a determination in relation to an asset of the head trust:

(i) any distributions of capital of the head trust in respect of each capital unitholding of less than 1% in the trust at each such time; and

(ii) any income that may be distributed by the head trust in respect of each income unitholding of less than 1% in the trust at each such time.

160ZZSM(3)   Notional shareholder or unitholder of the interposed entity.  

Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may also be determined as if, for each interposed entity, a different single notional natural person (the notional holder ) had the right to receive, for the person's own benefit and directly:

(a) if the interposed entity is a public company:

(i) any distributions of capital of the interposed entity in respect of each capital shareholding of less than 1% in the interposed entity at each such time; and

(ii) any dividends the interposed entity may pay in respect of each dividend shareholding of less than 1% in the interposed entity at each such time; or

(b) if the interposed entity is a publicly traded unit trust:

(i) any distributions of capital of the interposed entity in respect of each capital unitholding of less than 1% in the interposed entity at each such time; or

(ii) any income that may be distributed by the interposed entity in respect of each income unitholding of less than 1% in the interposed entity at each such time.

160ZZSM(4)   People who actually had rights in respect of head company or head trust are taken not to have had the rights.  

If subsection (2) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the determination is to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):

(a) any distributions of capital of the head company or head trust in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the company or trust; and

(b) any dividends that may be paid by the head company, or any income that may be distributed by the head trust, in respect of each dividend shareholding of less than 1% in the company or each income unitholding of less than 1% in the trust;

did not have that right.

160ZZSM(5)   People who actually had rights in respect of interposed entity are taken not to have had the rights.  

If subsection (3) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the determination is also to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):

(a) any distributions of capital of the interposed entity in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the entity; and

(b) any dividends that may be paid by, or any income that may be distributed by, the interposed entity in respect of each dividend shareholding of less than 1% or each income unitholding of less than 1% in the entity;

did not have that right.

160ZZSM(6)   Reduction of percentage of notional holder's rights to distributions.  

If:

(a) the percentage of the distributions of capital, dividends or income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at a test time;

is greater than:

(b) the percentage (the lower percentage ) of the distributions of capital, dividends or other income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at the base time;

the notional holder is taken to have the right to receive the lower percentage of the distributions of capital, dividends or other income at the test time.