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INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 328.112

Working out whether you are a small business entity for certain small business concessions--entities connected with you

             (1)  For the purpose of working out whether you are a small business entity for the 2007-08, 2008-09, 2009-10 or 2010-11 income year (each a relevant income year ) for the purposes of a provision to which subsection (3) applies:

                     (a)  subsection 328-125(4) of the Income Tax Assessment Act 1997 does not apply; and

                     (b)  the following subsection applies instead.

             (2)  An entity (the first entity ) controls a discretionary trust for a relevant income year if, for any of the 4 income years (a previous income year ) before that year:

                     (a)  if the previous income year is before the 2007-08 income year--the trustee of the trust made a distribution of $100,000 or more to the first entity, any of its affiliates, or the first entity and any of its affiliates; or

                     (b)  if the previous income year is the 2007-08 income year or a later income year:

                              (i)  the trustee of the trust paid to, or applied for the benefit of, the first entity, any of the first entity's affiliates, or the first entity and any of its affiliates, any of the income or capital of the trust; and

                             (ii)  the percentage (the control percentage ) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year.

             (3)  This subsection applies to the following provisions:

                     (a)  Subdivision 328-D of the Income Tax Assessment Act 1997 (simpler rules for depreciating assets);

                     (b)  Subdivision 328-E of the Income Tax Assessment Act 1997 (simplified trading stock rules);

                     (d)  sections 82KZM and 82KZMD of the Income Tax Assessment Act 1936 (deducting certain prepaid expenses immediately);

                     (e)  section 170 of the Income Tax Assessment Act 1936 (standard 2-year period for amending assessments).



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