INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 7 - Private companies  

SECTION 105   PHASING-OUT DIVIDENDS  

105(1)   [Phasing-out amount if sufficient distribution from 1/7/85]  

Where, but for subsection (7), a company has made a sufficient distribution in relation to the year of income commencing on 1 July 1985 or a subsequent year of income, the phasing-out amount of the company in relation to the year of income is the amount of the excess referred to in subsection 105A(1) ascertained as at the end of the prescribed period and without regard to section 105AA .

105(2)   [Phasing-out amount if insufficient distribution from 1/7/85]  

Where, but for subsection (7), a company has not made a sufficient distribution in relation to the year of income commencing on 1 July 1985 or a subsequent year of income, the phasing-out amount of the company in relation to the year of income is the amount of the dividends taken into account in determining the undistributed amount in relation to the year of income ascertained as at the end of the prescribed period and without regard to section 105AA .

105(3)   [Allocation of phasing-out amount]  

Where the amount that, but for subsection (7), would be the phasing-out amount of a company in relation to a year of income is greater than nil:

(a) the company shall:

(i) allocate the whole, or particular parts, of the phasing-out amount to the shareholder, or to all or any of the shareholders, to whom dividends (in this subsection called the eligible dividends ), being dividends taken into account in ascertaining whether the company has made a sufficient distribution in relation to the year of income, were paid so that:

(A) a shareholder is not allocated an amount that exceeds the amount of eligible dividends so paid to the shareholder; and

(B) the sum of the amounts so allocated equals the phasing-out amount;

(ii) give to each such shareholder a notice in writing specifying the amount allocated to the shareholder; and

(iii) give to the Commissioner a copy of each such notice; and

(b) the allocation under paragraph (a) shall be made, and the notices given:

(i) if the prescribed period ended before the commencement of this subsection - within 28 days after the commencement of this subsection; or

(ii) in any other case - within 28 days after the end of the prescribed period;

or within such further time as the Commissioner allows.

105(4)   [Retrospective dividends]  

Where dividends (in this subsection called retrospective dividends ) paid to a shareholder in a company after 1 July 1985 are deemed by section 105AA to have been paid during the prescribed period in relation to a year of income of the company;

(a) the company shall:

(i) give to each shareholder to whom any of the retrospective dividends were paid a notice in writing stating that this subsection applies to the retrospective dividends paid to the shareholder; and

(ii) give to the Commissioner a copy of each such notice; and

(b) the notices under paragraph (a) in relation to the payment of dividends to a shareholder shall be given:

(i) if the dividends were paid before the commencement of this subsection - within 28 days after the commencement of this subsection or such further time as the Commissioner allows; or

(ii) in any other case - not later than 28 days after the time of payment of the dividends or such later time as the Commissioner allows.

105(5)   [Notice re certain dividends]  

Where all of the following conditions are satisfied in relation to dividends paid by a company:

(a) the dividends were paid after 1 July 1985;

(b) the dividends are taken into account in determining whether the company has made a sufficient distribution in relation to the year of income commencing on 1 July 1984 or an earlier year of income;

(c) apart from section 105AA , the dividends were paid during the prescribed period in relation to the year of income to which paragraph (b) applies;

the company shall, within 28 days after the commencement of this subsection or such further time as the Commissioner allows, give a notice in writing to each shareholder to whom any of the dividends were paid stating that this subsection applies to the dividends paid to the shareholder.

105(6)   [Phasing-out dividends included in distributable income]  

The distributable income of a company of a year of income (in this subsection called the current year of income ) shall be taken to include phasing-out dividends of an amount equal to so much of the aggregate of the following amounts as does not exceed the distributable income:

(a) where the company has been given a notice under paragraph (3)(a) in relation to dividends paid to the company in the current year of income:

(i) if the notice relates only to dividends paid to the company in the current year of income - the amount allocated to the company in accordance with paragraph (3)(a);

(ii) if the notice relates to dividends paid to the company in the current year of income and also relates to dividends paid to the company in the year of income next succeeding the current year of income - so much of the amount allocated to the company in accordance with paragraph (3)(a) as does not exceed the amount of the dividends to which the notice relates that were paid to the company in the current year of income; and

(iii) if the notice relates to dividends paid to the company in the current year of income and also relates to dividends paid to the company in the year of income preceding the current year of income - the amount allocated to the company in accordance with paragraph (3)(a) reduced by so much of that amount as was taken into account in applying subparagraph (ii) of this paragraph to that preceding year of income;

(b) if the current year of income is the year of income commencing on 1 July 1986 or a later year of income and the company has been given a notice under subsection (4) or (5) in relation to dividends paid to the company in the current year of income - the amount of the dividends paid.

105(7)   [Contravention of section]  

If a company contravenes subsection (3), (4) or (5) in relation to a year of income, this Division applies to the company in relation to the year of income as if the company did not pay any dividends during the prescribed period.