Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 118 - Exemptions  

Subdivision 118-F - Venture capital investment  

Operative provisions

SECTION 118-435   Special rule relating to investment in foreign resident holding companies  

118-435(1)    

A company that meets the requirements of subsections 118-425(6) and (7) is treated as also meeting the requirements of subsections 118-425(2) , (3) , (4) , (4A) and (5) if:

(a) it is a resident of:

(i) Canada; or

(ii) France; or

(iii) Germany; or

(iv) Japan; or

(v) the United Kingdom; or

(vi) the United States of America; or

(vii) any other foreign country prescribed by the regulations; and

(b) it beneficially owns all the *shares in another company or all the units in a unit trust; and

(c) it does not carry on any *business other than to support the primary activity of the other company or unit trust; and

(d) the other company meets the requirements of subsections 118-425(2) to (7), or the unit trust meets the requirements of subsections 118-427(3) to (8) , as the case requires.

118-435(2)    
However, if:

(a) the company is so treated as meeting those requirements; and

(b) at any time within the period of 12 months after the day on which the first *eligible venture capital investment was made in the company:

(i) the other company ceases to be an Australian resident; or

(ii) the unit trust ceases to carry on *business in Australia;

as the case requires;

then:

(c) any eligible venture capital investments already made in the company or unit trust cease to be eligible venture capital investments; and

(d) any further investments made in the company or unit trust are not eligible venture capital investments.