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Edited version of your written advice
Authorisation Number: 1051236113973
Date of advice: 20 June 2017
Ruling
Subject: Share buy-back
Question 1
Will Company A derive assessable income, be allowed to claim a deduction, or make a capital gain or capital loss as a result of the buy-back pursuant to section 159GZZZN of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
No.
Question 2
Will Company A be subject to an obligation to withhold under section 12-210 or section 12-215 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) as a result of the Commissioner making a determination under section 45A or section 45B of the ITAA 1936 that section 45C of the ITAA 1936 applies to deem the whole, or a part, of the buy-back price to be a dividend?
Answer
No.
This ruling applies for the following periods:
1 July 2016 to 30 June 2017
Relevant facts and circumstances
Company A is an Australian tax resident.
Company A proposes to undertake an off-market share buy-back.
The buy-back price will be wholly debited to the Company A’s share capital account.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 159GZZZN
Income Tax Assessment Act 1936 section 45A
Income Tax Assessment Act 1936 section 45B
Income Tax Assessment Act 1936 section 45C
Taxation Administration Act 1953 section 12-210 of Schedule 1
Taxation Administration Act 1953 section 12-215 of Schedule 1
Reasons for decision
Question 1
The proposed buy-back is an off-market purchase for the purposes of Division 16K of Part III of the ITAA 1936.
Section 159GZZZN of the ITAA 1936 will apply so that Company A will not derive assessable income, be allowed to claim a deduction, or make a capital gain or capital loss as a result of the buy-back.
Question 2
As the Commissioner will not make a determination under section 45A and section 45B of the ITAA 1936 that section 45C of the ITAA 1936 applies to deem the whole, or a part of the buy-back price to be a dividend, Company A will not be subject to an obligation to withhold under section 12-210 or section 12-215 of Schedule 1 to the TAA 1953.