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INCOME TAX ASSESSMENT ACT 1997 - SECT 165.220

Special alternative to change of ownership test for Subdivision 165-B

             (1)  If the company does not meet the condition in paragraph 165-35(a), it is nevertheless taken to meet the condition if it meets the conditions in this section.

First condition

             (2)  At all times during the income year:

                     (a)  both:

                              (i)  persons must have held * fixed entitlements to all of the income and capital of the company; and

                             (ii)  * non-fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or

                     (b)  both:

                              (i)  a * fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, fixed entitlements to all of the income and capital of the company; and

                             (ii)  non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.

Second condition

             (3)  The persons holding * fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:

                     (a)  in a paragraph (2)(a) case--the company; or

                     (b)  in a paragraph (2)(b) case--the holding entity;

at the beginning of the income year must have held those entitlements to those shares at all times during the income year.

Third condition

             (4)  At the beginning of the income year:

                     (a)  individuals must not have had (between them), directly or indirectly, and for their own benefit, * fixed entitlements to a greater than 50% share of the income of the company; or

                     (b)  individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.

Fourth condition

             (5)  It must be the case that, for each * non-fixed trust (other than an * excepted trust) that, at any time in the income year, held directly or indirectly a * fixed entitlement to a share of the income or capital of the company, section 267-60 in Schedule 2F to the Income Tax Assessment Act 1936 does not require the non-fixed trust to work out its net income and * tax loss for the income year under Division 268.

Note:          See section 165- 245 for when an entity is taken to have held or had, directly or indirectly, a fixed entitlement to a share of income or capital of a company.



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