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-CD - Reductions after alterations in ownership or control of loss company  

Operative provisions

SECTION 165-115ZC   Notices to be given  

Application

165-115ZC(1)    
This section applies when an alteration time occurs in respect of a *loss company.

Note:

Section 165-115ZC of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this section.

Controlling entity

165-115ZC(2)    
For the purposes of this section, an entity is a controlling entity of a *loss company if:

(a) the entity is not an individual; and

(b) the entity, disregarding any of its *associates, has a controlling stake in the loss company; and

(c) no other entity (except an individual or 2 or more individuals between them) has a controlling stake in the entity.

Foreign resident controlling entity to be disregarded in certain circumstances

165-115ZC(3)    

If:

(a) apart from this subsection, an entity that is a foreign resident would be a controlling entity of a *loss company; and

(b) there is an entity that is an Australian resident and would be a controlling entity of the loss company if all the foreign residents that held direct or indirect interests in the Australian resident were individuals;

then, for the purposes of this section, the entity referred to in paragraph (a) is taken not to be a controlling entity of the company but the Australian resident is taken to be a controlling entity of the company.

Notice by controlling entity of loss company

165-115ZC(4)    

An entity that was a controlling entity of the *loss company immediately before the alteration time must, before the end of 6 months after the latest of the following:

(a) the alteration time;

(b) the day on which the New Business Tax System (Miscellaneous) Act (No. 2) 2000 received the Royal Assent;

(c) the time (if any) specified by the Commissioner;

give a written notice, setting out the information mentioned in subsection (6), to each of its *associates that, to the loss company ' s knowledge, had a relevant equity interest or relevant debt interest in the loss company immediately before the alteration time.

Penalty: 30 penalty units.

Notice by loss company

165-115ZC(5)    

If:

(a) there was no controlling entity of the *loss company immediately before the alteration time; or

(b) no entity that was a controlling entity of the loss company immediately before the alteration time told the loss company in writing, within 2 months after the later of the following:

(i) the alteration time;

(ii) the day on which the New Business Tax System (Miscellaneous) Act (No. 2) 2000 received the Royal Assent;

that it had given, or proposed to give, notices to its associates under subsection (4);

the loss company must, before the end of 6 months after the latest of the following:

(c) the alteration time;

(d) the day on which the New Business Tax System (Miscellaneous) Act (No. 2) 2000 received the Royal Assent;

(e) the time (if any) specified by the Commissioner;

give a written notice, setting out the information mentioned in subsection (6), to each entity that, to the loss company ' s knowledge, had a relevant equity interest or relevant debt interest in the company immediately before the alteration time.

Penalty: 30 penalty units.

Offences are strict liability

165-115ZC(5A)    

An offence under subsection (4) or (5) is an offence of strict liability.

Note:

For strict liability , see section 6.1 of the Criminal Code .

Information to be included in notice

165-115ZC(6)    
The information to be contained in a notice given under subsection (4) or (5) must include:

(a) the time that is the alteration time; and

(b) the amount of the *loss company ' s overall loss at that time; and

(c) for each income year for which the loss company had at that time a *tax loss or *net capital loss referred to in subsection 165-115R(3) or 165-115S(3) - the type and amount of the loss; and

(d) the amount of any adjusted unrealised loss that the loss company had at that time; and

(e) particulars (for the purpose of assisting the entity to whom the notice is given (the recipient ) to comply with the requirements of this Subdivision) of the amounts, proportions, and times of *acquisition, of all relevant equity interests and relevant debt interests in the loss company held by entities through which the recipient had relevant equity interests or relevant debt interests in the loss company.

Entity or loss company not required to give information about matters that are not known to it

165-115ZC(7)    
An entity or *loss company is not required by this section to set out information in a notice unless:

(a) the information is known to the entity or company; or

(b) the entity or company could reasonably be expected to know the information and can readily obtain it.

Commissioner ' s power to specify a later time for giving notice

165-115ZC(7A)    

The Commissioner may, by written notice given to an entity, or *loss company, that is required to give a notice under subsection (4) or (5), specify a time later than the alteration time as the start of the 6 months mentioned in the subsection.

Commissioner ' s power to waive requirement for notice

165-115ZC(7B)    

The Commissioner may give an entity or *loss company a written declaration that subsection (4) or (5) does not apply to require the entity or company to give a notice relating to the alteration time. If the Commissioner does so, the subsection does not apply in relation to the alteration time.

Considerations relating to Commissioner ' s powers

165-115ZC(7C)    

In deciding whether to specify a time for the purposes of subsection (4) or (5) or declare that the subsection does not apply, the Commissioner must consider:

(a) the consequences of doing so for each entity to which notice must be given under the subsection (apart from any such declaration); and

(b) any other matters that the Commissioner considers relevant.

Obligations of person not affected by failure to give notice

165-115ZC(8)    
Any failure by an entity or the *loss company to give a notice to a person under this section does not affect any obligation of the person to comply with the requirements of this Subdivision.