Income Tax Assessment Act 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 272 - Interpretation  

Subdivision 272-A - Fixed entitlement to share of income or capital  

SECTION 272-25   SPECIAL CASES OF FIXED ENTITLEMENTS HELD DIRECTLY OR INDIRECTLY  

Coverage of section

272-25(1)    
This section affects references in this Schedule (other than in subparagraph 269-75(b)(ii) and section 272-30 ) to a person or individual having, directly or indirectly , a fixed entitlement to a share of the income or capital of a company, partnership or trust (the main entity ) at a particular time (the test time ).

Note:

This section will not affect a reference to a person or individual having a fixed entitlement where the phrase " directly or indirectly " is not used.

Certain interposed government bodies and special companies

272-25(2)    
If at the test time a government body or a special company has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity, subsection (4) or (5) applies.

To find out the meaning of government body and special company : see section 272-140 .

Certain interposed funds

272-25(3)    
If:

(a) a fund is:

(i) a complying superannuation fund or complying approved deposit fund in relation to the income year in which the test time occurs; or

(ii) a superannuation fund for foreign residents at the test time; and

(b) at the test time the fund has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity;

subsection (4) or (5) applies.

Note:

See subsection 6(1) for the meaning of complying superannuation fund, complying approved deposit fund and superannuation fund for foreign residents .

Government bodies, and funds or companies with more than 50 members

272-25(4)    
In the case of a government body, or a fund or company that has more than 50 members:

(a) except where paragraph (b) applies - the body, fund or company is treated as if it had the fixed entitlement as an individual and for the individual ' s own benefit; and

(b) if the reference is in subsection 272-105 (2) - the fixed entitlement is treated as if it were held instead by more than 20 individuals and for their own benefit.

Funds or companies with 50 members or fewer

272-25(5)    
In the case of a fund or company that has 50 members or fewer, the fund or company is treated as if it did not have the entitlement, but the members are treated as if they had the entitlement in equal proportions.

Mixed application of subsections (4) and (5) in certain provisions

272-25(6)    
If, apart from this subsection:

(a) the following apply:

(i) for the purposes of section 266-40 or subsection 267-40(2) , 267-70(2) , 268-10(3) , 268-15(3) or 268-25(4) , it is necessary to determine whether individuals had fixed entitlements during a period; and

(ii) the consequences in subsection (4) would apply to a fund or company for part of the period and the consequences in subsection (5) would apply for the remainder of the period; or

(b) the following apply:

(i) for the purposes of subsection 266-90(1) or (2) , 266-125(2) , 266-165(2) or 268-20(3) , it is necessary to determine whether individuals had fixed entitlements at 2 times; and

(ii) the consequences in subsection (4) would apply to a fund or company at one of the times and the consequences in subsection (5) would apply at the other time;

the consequences in subsection (5) instead apply to the fund or company for the whole of the period, or at both of the times, as the case may be.

Entities ceasing to be special companies

272-25(7)    
If:

(a) subsection (4) or (5) applies in relation to a special company during a period (the special company period ); and

(b) the special company period ends when the special company ceases to be a special company without ceasing to exist; and

(c) having regard to the matters set out in subsection (8), the Commissioner considers it fair and reasonable to treat one or more of the persons who were members of the special company immediately after it ceased to be a special company as having held the fixed entitlement mentioned in subsection (2) during the whole or part of the special company period;

then:

(d) subsection (4) or (5) does not apply in relation to the special company during the whole or the part of the special company period; and

(e) the one or more persons are, as mentioned in paragraph (c), treated as having the fixed entitlement instead of the company.

Matters for the purposes of paragraph (7)(c)

272-25(8)    
For the purposes of paragraph (7)(c), the matters are:

(a) the identity of its members before and after the special company ceases to be a special company; and

(b) the circumstances in which it ceases to be a special company; and

(c) the nature of the rights in the special company held by its members before and after it ceases to be a special company; and

(d) any other matter that the Commissioner considers relevant.