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INCOME TAX ASSESSMENT ACT 1997 - SECT 166.225

Direct stakes of less than 10% in the tested company

  (1)   This section modifies how the ownership tests in section   166 - 145 are applied to the tested company if:

  (a)   a * voting stake that carries rights to less than 10% of the voting power in the company is held directly in the company; or

  (b)   a * dividend stake that carries the right to receive less than 10% of any dividends that the company may pay is held directly in the company; or

  (c)   a * capital stake that carries the right to receive less than 10% of any distribution of capital of the company is held directly in the company.

Note 1:   Other rules might affect this provision: see sections   166 - 270, 166 - 275 and 166 - 280.

Note 2:   Division   167 has special rules for working out rights to voting power, dividends and capital distributions in a company whose shares do not all carry the same rights to those matters.

Notional shareholder

  (2)   The tests are applied to the tested company as if, at the * ownership test time, a single notional entity:

  (a)   directly controlled the voting power that is carried by each such * voting stake; and

  (b)   had the right to receive, for its own benefit and directly:

  (i)   any * dividends the tested company may pay in respect of each such * dividend stake; and

  (ii)   any distributions of capital of the tested company in respect of each such * capital stake; and

  (c)   were a person (other than a company).

Note:   The persons who actually control the voting power and have rights to dividends and capital are taken not to control that power or have those rights: see section   166 - 265.

  (3)   To avoid doubt, the single notional entity mentioned in subsection   (2) is a different single notional entity from the one mentioned in section   165 - 207 and the one mentioned in section   166 - 255.


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