Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 16K - Effect of buy-backs of shares  

Subdivision C - Off-market purchases  

SECTION 159GZZZP   PART OF OFF-MARKET PURCHASE PRICE IS A DIVIDEND IF THE COMPANY IS NOT A LISTED PUBLIC COMPANY  

159GZZZP(1)    

For the purposes of this Act, but subject to subsection (1A) , where a buy-back of a share or non-share equity interest by a company is an off-market purchase, the difference between:

(a)    

the purchase price; and

(b)    

the part (if any) of the purchase price in respect of the buy-back of the share or non-share equity interest which is debited against amounts standing to the credit of:

(i) the company's share capital account if it is a share that is bought back; or

(ii) the company's share capital account or non-share capital account if it is a non-share equity interest that is bought back;

is taken to be a dividend paid by the company:

(c)    to the seller as a shareholder in the company; and

(d)    out of profits derived by the company; and

(e)    on the day the buy-back occurs.

159GZZZP(1A)    

If the dividend is included to any extent in the seller's assessable income of any year of income, it is not taken into account to that extent under section 118-20 of the Income Tax Assessment Act 1997 .

159GZZZP(2)    
The remainder of the purchase price is taken not to be a dividend for the purposes of this Act.

159GZZZP(3)    

This section does not apply if the company is a listed public company.