INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 7 - Private companies  

SECTION 103AA   PRESCRIBED DIVIDENDS  

103AA(1)   [Dividend paid by resident Australian company]  

Subject to this section, a dividend is a prescribed dividend for the purposes of this Division if the dividend -

(a) was derived on or after 20 July 1972 and before 26 October 1973 by a company that -

(i) was a resident of Papua New Guinea and was not a resident of Australia; and

(ii) was a private company in relation to the year of income of that company in which the dividend was derived,

or was derived on or after 26 October 1973 by a company that -

(iii) was not a resident of Australia; and

(iv) was a private company in relation to the year of income of that company in which the dividend was derived; and

(b) was paid by a company that -

(i) was a resident of Australia; and

(ii) was a private company in relation to the year of income of that company in respect of which the dividend would, but for this section, be taken into account in ascertaining whether the company had made a sufficient distribution.

103AA(2)   [Dividend paid by non-resident company]  

Subject to this section, a dividend that -

(a) was derived on or after 20 July 1972 and before 26 October 1973 by a company that -

(i) was a resident of Papua New Guinea and was not a resident of Australia; and

(ii) was a private company in relation to the year of income of that company in which the dividend was derived,

or was derived on or after 26 October 1973 by a company that -

(iii) was not a resident of Australia; and

(iv) was a private company in relation to the year of income of that company in which the dividend was derived; and

(b) was paid by a company that -

(i) was not a resident of Australia; and

(ii) was a private company in relation to the year of income of that company in respect of which the dividend would, but for this section, be taken into account in ascertaining whether the company had made a sufficient distribution,

is a prescribed dividend for the purposes of this Division to the extent to which the dividend was paid out of profits (excluding so much of those profits as consists of dividends to which subsection (1) applies) derived by the company paying the dividend from sources in Australia.

103AA(3)   [Exclusion from prescribed dividend]  

Where subsection (1) or (2) applies to a dividend or a part of a dividend (which dividend or part of a dividend is in the following provisions of this section referred to as a relevant dividend ), so much of that relevant dividend as is required to be disregarded by virtue of subsection (4) is not a prescribed dividend for the purpose of this Division.

103AA(4)   [Conditions for exclusion]  

For the purposes of the application of subsection (3) in relation to a relevant dividend, there shall be disregarded -

(a) so much of the relevant dividend as the Commissioner is satisfied -

(i) will, by virtue of a distribution of a dividend by the company that derived the relevant dividend, or successive distributions of dividends by that company and another company or other companies, be derived (otherwise than as a trustee) by a non-resident, not being a company, or by a company that the Commissioner considers it is reasonable to assume will be a public company for the purposes of section 103A in relation to the year of income of the company in which the Commissioner is satisfied that the pertinent part of the dividend will be derived by that company; and

(ii) will not be applied (except in circumstances that are capable of explanation by reference to ordinary commercial or family dealing and are not attributable to an agreement or transaction that was entered into or effected for the purpose, or for purposes that included the purpose, of avoiding liability to taxation) for the benefit of a resident of Australia, not being a company, or for the benefit of a company that the Commissioner considers it is reasonable to assume will be a private company in relation to any relevant year of income;

(b) so much of the relevant dividend as the Commissioner is satisfied will, by virtue of a distribution of a dividend by the company that derived the relevant dividend, or successive distributions of dividends by that company and another company or other companies, be derived (otherwise than as a trustee) by a resident of Australia, not being a company, before the expiration of 10 months after the year of income of the company that derived the relevant dividend during which that company derived that dividend;

(c) so much of the relevant dividend as the Commissioner is satisfied will be included in the undistributed amount upon which the company deriving the relevant dividend will be liable to pay additional tax under section 104 ;

(d) so much of the relevant dividend as the Commissioner is satisfied will, by virtue of a distribution of a dividend by the company that derived the relevant dividend or successive distributions of dividends by that company and another company or other companies (being a distribution or distributions made before the expiration of 10 months after the year of income of the company that derived the relevant dividend during which that company derived that dividend), be included in the undistributed amount upon which a company other than the company that derived the relevant dividend will be liable to pay additional tax under section 104 ;

(da) so much of any part of the relevant dividend that is not required to be disregarded by virtue of paragraph (a), (b), (c) or (d) as the Commissioner is satisfied has been, or will be, applied in payment of tax payable under any law in force in Australia or another country in respect of -

(i) the relevant dividend; or

(ii) so much of any dividend paid by the company that derived the relevant dividend or by any other company as may appropriately be related to the relevant dividend; and

(e) so much of the relevant dividend as the Commissioner is satisfied should be disregarded by reason of special circumstances.

103AA(5)   [Application of s 24H for purposes of subsec (4)(a)(ii)]  

In satisfying himself, in relation to a relevant dividend, as to a matter referred to in subparagraph (4)(a)(ii), the Commissioner shall have regard to the same considerations as those to which regard is required to be had by section 24H in determining for the purposes of Division 1A whether income may be applied for the benefit of a person.

103AA(6)   [90% exclusion]  

No part of a relevant dividend shall be taken to be a prescribed dividend for the purposes of this Division if, by virtue of subsection (4), more than 90% of that relevant dividend is required to be disregarded.

103AA(7)   [Commissioner's relieving power]  

Where -

(a) a part of a dividend is required by virtue of subsection (4) to be disregarded by reason that the Commissioner was satisfied as to a matter in relation to that part of that dividend in accordance with that subsection; and

(b) the Commissioner considers that, having regard to all the circumstances, he ought not to have been satisfied as to that matter,

subsection (4) has effect as if the Commissioner had not been satisfied as to that matter.

103AA(8)   [Amendment of assessments]  

Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment for the purpose of giving effect to subsection (7) if the amendment is made within 6 years after the date upon which the tax became due and payable under the assessment, but nothing in this subsection limits the power of the Commissioner to amend an assessment in accordance with any other provision of this Act or any provision of any other Act.

103AA(9)