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-F - Special provisions relating to ownership by non-fixed trusts  

SECTION 165-230   Special alternative to change of ownership test for Subdivision 165-C  

165-230(1)    
If a company does not meet the conditions in section 165-123 , it is nevertheless taken to meet the conditions if it meets the conditions in this section.

First condition

165-230(2)    

At all times during the *ownership test period:

(a) both:

(i) persons must have held *fixed entitlements to all of the income and capital of the company; and

(ii) *non-fixed trusts, other than *family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or

(b) both:

(i) a *fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, fixed entitlements to all of the income and capital of the company; and

(ii) non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.

Second condition

165-230(3)    

The persons holding *fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:

(a) in a paragraph (2)(a) case - the company; or

(b) in a paragraph (2)(b) case - the holding entity;

at the beginning of the *first continuity period must have held those entitlements to those shares at all times during the *ownership test period.

Third condition

165-230(4)    
At the beginning of the *first continuity period:

(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, *fixed entitlements to a greater than 50% share of the income of the company; or

(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.

Fourth condition

165-230(5)    

It must be the case that, for each *non-fixed trust (other than an *excepted trust) that, at any time during the *ownership test period, held directly or indirectly a *fixed entitlement to a share of the income or capital of the company, section 267-25 in Schedule 2F to the Income Tax Assessment Act 1936 would not have prevented the non-fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.

Note:

See section 165-245 for when an entity is taken to have held or had, directly or indirectly, a fixed entitlement to a share of income or capital of a company.