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INCOME TAX ASSESSMENT ACT 1997 - SECT 165.230

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

             (1)  If a company does not meet the conditions in section 165-123, it is nevertheless taken to meet the conditions if it meets the conditions in this section.

First condition

             (2)  At all times during the * ownership test period:

                     (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 * first continuity period must have held those entitlements to those shares at all times during the * ownership test period.

Third condition

             (4)  At the beginning of the * first continuity period:

                     (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 during the * ownership test period, held directly or indirectly a * fixed entitlement to a share of the income or capital of the company, section 267- 25 in Schedule 2F to the Income Tax Assessment Act 1936 would not have prevented the non-fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.

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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