Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-A - Deducting tax losses of earlier income years  

Operative provisions

SECTION 165-12   Company must maintain the same owners  

Ownership test period

165-12(1)    
In determining whether section 165-10 prevents a company from deducting a *tax loss, the ownership test period is the period from the start of the *loss year to the end of the income year.

Note:

See section 165-255 for the rule about incomplete test periods.

Voting power

165-12(2)    
There must be persons who had *more than 50% of the voting power in the company at all times during the *ownership test period.

Note 1:

See section 165-150 to work out who had more than 50% of the voting power.

Note 2:

Subdivision 167-B has special rules for working out voting power in a company whose shares do not all carry the same voting rights, or do not carry all of the voting rights in the company.

Rights to dividends

165-12(3)    
There must be persons who had rights to *more than 50% of the company ' s dividends at all times during the *ownership test period.

Note 1:

See section 165-155 to work out who had rights to more than 50% of the company ' s dividends.

Note 2:

Subdivision 167-A has special rules for working out rights to dividends in a company whose shares do not all carry the same rights to dividends.

Rights to capital distributions

165-12(4)    
There must be persons who had rights to *more than 50% of the company ' s capital distributions at all times during the *ownership test period.

Note 1:

See section 165-160 to work out who had rights to more than 50% of the company ' s capital distributions.

Note 2:

Subdivision 167-A has special rules for working out rights to capital distributions in a company whose shares do not all carry the same rights to capital distributions.

When to apply the primary test

165-12(5)    
To work out whether a condition in this section was satisfied at all times during the *ownership test period, apply the primary test for that condition unless subsection (6) requires the alternative test to be applied.

Note:

For the primary test, see subsections 165-150(1) , 165-155(1) and 165-160(1) .

When to apply the alternative test

165-12(6)    

Apply the alternative test for that condition if one or more other companies beneficially owned *shares or interests in shares in the company at any time during the *ownership test period.

Note:

For the alternative test, see subsections 165-150(2) , 165-155(2) and 165-160(2) .

Conditions in subsections (2), (3) and (4) may be treated as having been satisfied in certain circumstances

165-12(7)    

If any of the conditions in subsections (2), (3) and (4) have not been satisfied, those conditions are taken to have been satisfied if:

(a) they would have been satisfied except for the operation of section 165-165 ; and

(b) the company has information from which it would be reasonable to conclude that less than 50% of the *tax loss has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any *direct equity interests or *indirect equity interests in the company during the *ownership test period.

165-12(7A)    

If the company is:

(a) a *non-profit company; or

(b) a *mutual affiliate company; or

(c) a *mutual insurance company;

during the whole of the *ownership test period, the conditions in subsections (3) and (4) are taken to have been satisfied by the company.

Time of happening of CGT event

165-12(8)    

The happening of a *CGT event in relation to a *direct equity interest or *indirect equity interest in the company that results in the failure of the company to satisfy a condition in subsection (2), (3) or (4) is taken, for the purposes of paragraph (7)(b), to have occurred during the *ownership test period.

165-12(9)    
(Repealed by No 143 of 2007 )