TAXATION (UNPAID COMPANY TAX) ASSESSMENT ACT 1982

***** Repealed 22 September 1999 *****

SECTION 7   PROMOTERS TAXABLE AMOUNTS  

7(1)  [Purchase of shares in taxable company]  

Where:

(a)  under a scheme entered into, whether in Australia or outside Australia, on or after 1 January 1972 and before 4 December 1980, some or all of the shares in a company were purchased;

(b)  the purchase or purchases of the shares referred to in paragraph (a) occurred before the commencement of this Act;

(c)  immediately after the last purchase time, the person or persons who purchased the shares referred to in paragraph (a) was or were, by virtue of rights attaching to the shares, capable of controlling more than 90% of the voting power in the company;

(d)  an assessment of ordinary company tax or undistributed profits tax has been made under the Assessment Act, whether before or after the commencement of this Act, in relation to the company in relation to a year of income (in this subsection referred to as the ``relevant year of income''), being the year of income in which the last purchase time occurred or a preceding year of income;

(e)  the period for objecting against the assessment has expired and any objection against the assessment has been finalised;

(f)  at any time (in this subsection referred to as the ``relevant time'') after the commencement of this Act, there remains unpaid an amount (in this subsection referred to as the ``overdue company tax'') of ordinary company tax or undistributed profits tax, as the case may be, due and payable by the company in relation to the relevant year of income;

(g)  before the relevant time, an arrangement or transaction (whether or not the arrangement or transaction was, or was part of, the scheme) was entered into that secured or achieved the result that:

(i) in a case to which subparagraph (ii) does not apply - at the relevant time, the company was unable, having regard to other debts of the company, to pay to the Commissioner all the company tax due and payable by the company at the relevant time; or

(ii) if the company ceased to exist before the relevant time - immediately before the company ceased to exist, the company would have been unable, having regard to other debts of the company, to pay to the Commissioner all the company tax that would have been due and payable by the company immediately before it ceased to exist if the company tax due and payable by the company at the relevant time had been due and payable by the company immediately before it ceased to exist; and

(h)  if the company carried on a business immediately before the last purchase time, not being a business that consisted only of deriving income from property - the company did not continue to carry on that business after the last purchase time,

a promoters taxable amount equal to:

(j)  in a case to which paragraph (k) does not apply - 20% of the overdue company tax; or

(k)  where:

(i) no vendors recoupment tax has become payable, and the Commissioner is of the opinion that no vendors recoupment tax will become payable, in relation to ordinary company tax or undistributed profits tax, as the case may be, payable by the company in relation to the relevant year of income; and

(ii) neither paragraph 5(4)(b) nor paragraph 6(18)(b) applied or, in the opinion of the Commissioner, will apply in relation to a vendors taxable amount in relation to ordinary company tax or undistributed profits tax, as the case may be, payable by the company in relation to the relevant year of income,

the overdue company tax,

shall be taken to exist at the relevant time in relation to the eligible promoters class.

7(2)  [Purchase of controlling interest in two or more companies]  

Where:

(a)  under a scheme entered into, whether in Australia or outside Australia, on or after 1 January 1972 and before 4 December 1980, some or all of the shares in one or more companies were purchased;

(b)  the purchase or purchases of the shares referred to in paragraph (a) occurred before the commencement of this Act;

(c)  immediately after the last purchase time, the person or persons who purchased the shares referred to in paragraph (a) was or were, by virtue of rights attaching to the shares, capable of controlling, either directly or through one or more interposed companies, trustees or partnerships, more than 90% of the voting power in each of 2 or more companies (in this subsection referred to as the ``eligible companies'');

(d)  an assessment of ordinary company tax or undistributed profits tax has been made under the Assessment Act, whether before or after the commencement of this Act, in relation to a company (in this subsection referred to as the ``taxable company''), being one of the eligible companies, in relation to a year of income (in this subsection referred to as the ``relevant year of income'') being the year of income in which the last purchase time occurred or a preceding year of income;

(e)  the period for objecting against the assessment has expired and any objection against the assessment has been finalised;

(f)  at any time (in this subsection referred to as the ``relevant time'') after the commencement of this Act, there remains unpaid an amount (in this subsection referred to as the ``overdue company tax'') of ordinary company tax or undistributed profits tax, as the case may be, due and payable by the taxable company in relation to the relevant year of income;

(g)  before the relevant time, an arrangement or transaction (whether or not the arrangement or transaction was, or was part of, the scheme) was entered into that secured or achieved the result that:

(i) in a case to which subparagraph (ii) does not apply - at the relevant time, the taxable company was unable, having regard to other debts of the taxable company, to pay to the Commissioner all the company tax due and payable by the taxable company at the relevant time; or

(ii) if the taxable company ceased to exist before the relevant time - immediately before the taxable company ceased to exist, the taxable company would have been unable, having regard to other debts of the taxable company, to pay to the Commissioner all the company tax that would have been due and payable by the taxable company immediately before it ceased to exist if the company tax due and payable by the taxable company at the relevant time had been due and payable by the taxable company immediately before it ceased to exist; and

(h)  if the taxable company carried on a business immediately before the last purchase time, not being a business that consisted only of deriving income from property - the taxable company did not continue to carry on that business after the last purchase time,

a promoters taxable amount equal to:

(j)  in a case to which paragraph (k) does not apply - 20% of the overdue company tax; and

(k)  where:

(i) no vendors recoupment tax has become payable and the Commissioner is of the opinion that no vendors recoupment tax will become payable, in relation to ordinary company tax or undistributed profits tax, as the case may be, payable by the taxable company in relation to the relevant year of income; and

(ii) neither paragraph 5(4)(b) nor paragraph 6(18)(b) applied or, in the opinion of the Commissioner, will apply in relation to a vendors taxable amount in relation to ordinary company tax or undistributed profits tax, as the case may be, payable by the taxable company in relation to the relevant year of income,

the overdue company tax,

shall be taken to exist at the relevant time in relation to the eligible promoters class.

7(3)  [Maximum promoters taxable amount]  

The promoters taxable amount, or the aggregate of the promoters taxable amounts, as the case may be, that exist by the application of subsection (1) or (2) in relation to a purchase or purchases of shares under a scheme shall not exceed:

(a)  in a case to which subsection (1) applies - the amount calculated in accordance with the formula A − L − T − C, where:

A is the total value, immediately before the last purchase time, of the assets of the company referred to in paragraph (1)(a);

L is the total amount of the liabilities of the company immediately before the last purchase time;

T is the amount of any company tax that was payable by the company in relation to the year of income in which the last purchase time occurred or a preceding year of income and was paid after the last purchase time and before 25 July 1982; and

C is the number of whole dollars in the amount or value of the total consideration paid or given in respect of the purchase or purchases under the scheme of all the shares referred to in paragraph (1)(a); or

(b)  in a case to which subsection (2) applies - the amount calculated in accordance with the formula A − L − T − C, where:

A is the aggregate of the total values, immediately before the last purchase time, of the assets of the eligible companies referred to in paragraph (2)(c);

L is the aggregate of the total amounts of the liabilities of those companies immediately before the last purchase time;

T is the aggregate of the amounts of company tax that were payable by those companies in relation to the year of income in which the last purchase time occurred or a preceding year of income and were paid after the last purchase time and before 25 July 1982; and

C is the number of whole dollars in the amount or value of the total consideration paid or given in respect of the purchase or purchases under the scheme of all the shares referred to in paragraph (2)(a).

7(4)  [Subsec (3) - assets and liabilities]  

For the purpose of the application of subsection (3) in relation to the purchase or purchases of shares under a scheme:

(a)  the total value of the assets of a company immediately before the last purchase time shall, subject to subsection (6), be taken to be:

(i) where, for the purposes of the purchase or purchases of the shares under the scheme, it was agreed by the parties to the purchase or to each of the purchases that the assets of the company were to be taken to have a particular value - that value; and

(ii) in any other case - such amount as the Commissioner determines; and

(b)  the total amount of the liabilities of a company immediately before the last purchase time shall be taken to be:

(i) where, for the purposes of the purchase or purchases of the shares under the scheme, it was agreed by the parties to the purchase or to each of the purchases that the total amount of the liabilities of the company was to be taken to be a particular amount - that amount; and

(ii) in any other case - such amount as the Commissioner determines.

7(5)  [Company tax excluded]  

In subsections (3) and (4), ``liabilities'' does not include liabilities in respect of company tax.

7(6)  [Para (4)(a) - assets not to be double-counted]  

The total value of the assets of a company at a particular time ascertained in accordance with paragraph (4)(a) for the purposes of the application of paragraph (3)(b) in relation to the company shall be reduced by an amount equal to so much of that total value as is attributable, by virtue of the beneficial ownership by the company of shares in another company that, for the purposes of that application of that paragraph, is one of the eligible companies referred to in that paragraph, to the value of the assets of that other company.

7(7)  [Subsec (2) overriding]  

Where subsection (2) applies in relation to the purchase of shares in a company, subsection (1) does not apply in relation to that purchase.

7(8)  [Eligible promoters class]  

For the purposes of the application of subsection (1) or (2) in relation to the purchase of shares under a scheme, the following persons constitute the eligible promoters class:

(a)  each person who purchased any of the shares (in this subsection referred to as the ``relevant shares'') referred to in paragraph (1)(a) or (2)(a), as the case may be;

(b)  each person who, in relation to the purchase of any of the relevant shares, acted as agent for the purchaser or acted as broker;

(c)  each person who:

(i) was an associate of a person who purchased any of the relevant shares at the time of the purchase of those shares; and

(ii) as part of, or in connection with, the scheme under which the relevant shares were purchased, gave, either directly or indirectly, financial assistance for the purpose of, or in connection with, the purchase by the person referred to in subparagraph (i) of any of the relevant shares;

(d)  where any of the relevant shares were purchased by a company - each person who, at the time of purchase of those shares by the company or at the time when the arrangement or transaction referred to in paragraph (1)(g) or (2)(g), as the case may be, was entered into, was a shareholder in, or a director of, the company;

(e)  where any of the relevant shares were purchased by a person (whether or not a company) in the capacity of trustee of a trust estate - each person who, at the time of purchase of those shares by the trustee or at the time when the arrangement or transaction referred to in paragraph (1)(g) or (2)(g), as the case may be, was entered into, was a beneficiary in the trust estate;

(f)  where any of the relevant shares were purchased by a company in the capacity of trustee of a trust estate - each person who, at the time of purchase of those shares by the company or at the time when the arrangement or transaction referred to in paragraph (1)(g) or (2)(g), as the case may be, was entered into, was a director of the company; and

(g)  where a person, being a company or the trustee of a trust estate, is included in the eligible promoters class by the application of paragraph (b), (c), (d), (e) or (f), or by another application of this paragraph, in relation to the purchase of any of the relevant shares by another person - each person who would be included in the eligible promoters class by the application of paragraph (d), (e) or (f) if the company or the trustee of the trust estate had purchased the shares:

(i) in a case to which subparagraph (ii) does not apply - at the time when the shares were purchased by the other person; and

(ii) if the company or the trust estate did not exist at the time when the shares were purchased by the other person - at the time when the company or trust estate commenced to exist.

7(9)  [Recipient of company funds deemed shareholder]  

For the purposes of ascertaining the persons who at any time (in this subsection referred to as the ``relevant time'') constitute the eligible promoters class for the purposes of the application of subsection (1) or (2) in relation to the purchase of shares under a scheme, where:

(a)  a company is included in the eligible promoters class by reason of the purchase by the company or by another person of any of the shares referred to in paragraph (1)(a) or (2)(a), as the case may be;

(b)  after the purchase of those shares and before the relevant time, the company paid an amount by way of advance or loan to, or made any payment on behalf of, or for the benefit of, a person (in this subsection referred to as the ``recipient''); and

(c)  having regard to:

(i) circumstances relating to the making of the advance, loan or payment, as the case may be;

(ii) the likelihood of the advance, loan or payment, as the case may be, not being repaid to the company; and

(iii) any other relevant circumstances,

it would be reasonable to conclude that the advance, loan or payment, as the case may be, represented a distribution of income or capital of the company to the recipient,

the recipient shall be deemed to have been a shareholder in the company at the time when the shares were purchased by the company or the other person, as the case may be.

7(10)  [Recipient of trust funds deemed beneficiary]  

For the purposes of ascertaining the persons who at any time (in this subsection referred to as the ``relevant time'') constitute the eligible promoters class for the purposes of the application of subsection (1) or (2) in relation to the purchase of shares under a scheme, where:

(a)  the trustee of a trust estate is included in the eligible promoters class by reason of the purchase by the trustee or by another person of any of the shares referred to in paragraph (1)(a) or (2)(a), as the case may be;

(b)  after the purchase of those shares and before the relevant time, the trustee paid an amount by way of advance or loan to, or made any payment on behalf of, or for the benefit of, a person (in this subsection referred to as the ``recipient''); and

(c)  having regard to:

(i) circumstances relating to the making of the advance, loan or payment, as the case may be;

(ii) the likelihood of the advance, loan or payment, as the case may be, not being repaid to the trustee; and

(iii) any other relevant circumstances,

it would be reasonable to conclude that the advance, loan or payment, as the case may be, represented a distribution of income or corpus of the trust estate to the recipient,

the recipient shall be deemed to have been a beneficiary in the trust estate at the time when the shares were purchased by the trustee or the other person, as the case may be.

7(11)  [Para (1)(c), (2)(c) - control of voting power]  

For the purposes of paragraphs (1)(c) and (2)(c), where:

(a)  under the scheme referred to in paragraph (1)(a) or (2)(a), as the case may be, a person purchased some or all of the shares in a company; and

(b)  immediately after the last purchase time in relation to the scheme, the person held an office in the company by virtue of which the person was capable of controlling any of the voting power in the company,

the person shall be deemed to have been capable of controlling that voting power immediately after the last purchase time in relation to the scheme by virtue of rights attaching to those shares.

7(12)  [Para (1)(e), (2)(e) - objection finalised]  

For the purposes of paragraphs (1)(e) and (2)(e), an objection against an assessment shall be taken to have been finalised if:

(a)  there is no proceeding that has been instituted in relation to the objection under Division 2 of Part V of the Assessment Act that has not been determined; and

(b)  the time for instituting proceedings under that Division in relation to the objection has expired.

7(13)  [Lapsed or terminated proceedings]  

For the purposes of paragraph (12)(a), any proceeding under Division 2 of Part V of the Assessment Act that has lapsed or otherwise been terminated shall be taken to have been determined.

7(14)  [Extension of time for instituting proceedings]  

For the purposes of paragraph (12)(b), the time for instituting a proceeding in relation to an objection under Division 2 of Part V of the Assessment Act shall not be taken not to have expired by reason only of the possibility that an extension of that time might be granted.

7(15)  [Subpara (8)(c)(ii) - ``financial assistance'']  

A reference in subparagraph (8)(c)(ii) to the giving of financial assistance includes a reference to the giving of financial assistance by means of the making of a loan, the giving of a guarantee, the provision of security, the release of an obligation or the forgiving of a debt or otherwise.

7(16)  [Disappearance of company or trust estate]  

For the purposes of this section, where a company that has ceased to exist or the trustee of a trust estate that has ceased to exist would be included in the eligible promoters class in relation to a promoters taxable amount if the company or the trust estate, as the case may be, had not ceased to exist, the company or the trustee of the trust estate shall be taken to be included in that eligible promoters class for the purposes of ascertaining whether other persons are included in that eligible promoters class.

7(17)  [``Arrangement or transaction'']  

In this section:

(a)  a reference to an arrangement or transaction includes a reference to both an arrangement and a transaction and to any series or combination of arrangements or transactions or arrangements and transactions; and

(b)  a reference to an arrangement includes a reference to an arrangement, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.

7(18)  [``Shareholder'']  

In this section, ``shareholder'', in relation to a company, includes a person who has a right (whether the right is enforceable presently or in the future and whether on the fulfilment of a condition or not) to have his name entered in the company's register of members.