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Edited version of your private ruling
Authorisation Number: 1012448171195
Ruling
Subject: Section 45B of the Income Tax Assessment Act 1936
Question 1
Will the Commissioner make a determination under paragraph 45B(3)(b) of the Income Tax Assessment Act 1936 (ITAA 1936) that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the capital benefit provided by Company A to its sole shareholder?
Answer
No.
This ruling applies for the following period:
Year ended 31 December 2013.
Relevant facts and circumstances
1. Company A is an Australian resident which is a wholly-owned subsidiary of Company B, a non-resident.
2. Company B is ultimately owned by Company C (also a non-resident) whose ordinary shares are listed on the offshore stock exchange.
3. Company C's ordinary shares are regularly traded on the offshore stock exchange.
4. The membership interests in Company A do not pass the principal asset test in subsection 855-30(2) of the Income Tax Assessment Act 1997 (ITAA 1997).
5. Company A's shares are post-CGT shares.
6. Company A will return share capital to Company B.
7. Company A will pay dividends to Company B.
8. Company A has not made any previous return of capital to Company B.
9. Company A has paid some dividends to Company B.
10. Company A had a credit balance in its franking account.
11. Company B has no net capital losses.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 45B
Income Tax Assessment Act 1936 section 45C
Income Tax Assessment Act 1936 paragraph 177D(b)
Reasons for decision
The Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the capital benefit provided by Company A to its shareholder, Company B.