Income Tax Assessment Act 1997

Div 166 substituted by No 147 of 2005, s 3 and Sch 1 item 79, effective 14 December 2005.

No 147 of 2005, s 3 and Sch 1 item 170 contains the following application provision:

Div 166 formerly read:

Division 166 - Income tax consequences of changing ownership or control of a listed public company

What this Division is about  
166-1
This Division modifies the way the rules in Division 165 apply to a listed public company (and also its 100% subsidiaries). It makes it easier for the company to comply with those rules:

• if the company has maintained the same owners as between certain points of time, it does not need to prove it has maintained the same owners throughout the periods in between;

• all shareholdings of less than 1% in the company are treated as if they were held by a single notional entity so that it is unnecessary to trace through to the persons who beneficially own those shareholdings;

• the company does not have to trace through any complying superannuation funds, complying approved deposit funds or special companies that are interposed between the company and persons who control any of the voting power, or who have rights to dividends or capital, in the company.

Subdivision 166-A - Deducting tax losses of earlier income years

How Subdivision 165-A applies to a listed public company  
166-5(1)
This Subdivision modifies the way Subdivision 165-A applies to a company that is a *listed public company at all times during a period (the test period ) consisting of the *loss year, the income year and any intervening period.

Note 1: Subdivision 165-A is about the conditions a company must satisfy before it can deduct a tax loss for an earlier income year.

Note 2: This Subdivision also modifies how Subdivision 165-A applies to a 100% subsidiary of a listed public company: see section 166-10.

Note 3: A company can choose that this Subdivision is not to apply to it: see section 166-15.

166-5(2)
The *listed public company is taken to have met the conditions in section 165-12 (which is about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between the start of the *test period and each of these other times in the period:

(a) the time of each *abnormal trading in *shares in the company; and

(b) the end of each income year.

See section 166-145 to work out whether there is substantial continuity of ownership.

166-5(3)
The *listed public company is taken to have failed to meet the conditions in section 165-12 if there is no *substantial continuity of ownership of the company as between the start of the *test period and one or more of the other times referred to in subsection (2).

166-5(4)
However, if the *listed public company satisfies the *same business test for the income year (the same business test period ), it is taken to have satisfied the condition in section 165-13 (which is about the company carrying on the same business).

For the same business test: see Subdivision 165-E.

166-5(5)
Apply the *same business test to the *business that the *listed public company carried on immediately before the first time (the test time ) covered by paragraph (2)(a) or (b) for which there was no *substantial continuity of ownership of the company as between the start of the *test period and that time.

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S 166-5(5) amended by No 114 of 2000.

How Subdivision 165-A applies to a 100% subsidiary of a listed public company  
166-10(1)
This Subdivision also modifies the way Subdivision 165-A applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.

Note: Subdivision 165-A is about the conditions a company must satisfy before it can deduct a tax loss for an earlier income year.

166-10(2)
The company (the subsidiary ) must be a *100% subsidiary of another company (the holding company ) at all times during a period consisting of:

(a) the *loss year of the subsidiary; and

(b) the income year of the subsidiary; and

(c) any intervening period.

166-10(3)
Also, the holding company must be a *listed public company at all times during that period.

166-10(4)
If the conditions are met then, for the purposes of applying Subdivision 165-A to the subsidiary, this Subdivision applies to the subsidiary as if:

(a) the subsidiary were itself a *listed public company at all times during that period; and

(b) an *abnormal trading in *shares in the holding company during that period were an abnormal trading in shares in the subsidiary.

(Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)

Companies can choose that this Subdivision is not to apply to them  
166-15(1)
The *listed public company or subsidiary can choose that Subdivision 165-A is to apply to it for the income year without the modifications made by this Subdivision.

166-15(2)
The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

Subdivision 166-B - Working out the taxable income, tax loss, net capital gain and net capital loss for the income year of the change

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Subdiv 166-B heading substituted by No 46 of 1998.

How Subdivisions 165-B and 165-CB apply to a listed public company  
166-20(1)
This Subdivision modifies how Subdivisions 165-B and 165-CB apply to a company that is a *listed public company at all times during the income year (the test period ).

Note 1: Subdivision 165-B is about when a company must calculate its taxable income and tax loss for the income year in a special way.

Note 1A: Subdivision 165-CB is about when a company must calculate its net capital gain and net capital loss for the income year in a special way.

Note 2: This Subdivision also modifies how Subdivisions 165-B and 165-CB apply to a 100% subsidiary of a listed public company: see section 166-30.

Note 3: A company can choose that this Subdivision is not to apply to it: see section 166-35.

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S 166-20(1) amended by No 46 of 1998.

166-20(2)
If there is no *abnormal trading in *shares in the *listed public company during the *test period, it is taken to have met the condition in paragraph 165-35(a) (which is about there being persons having *more than a 50% stake in it during the whole of the income year).

166-20(3)
If there is *abnormal trading, but there is *substantial continuity of ownership of the company as between the start of the *test period and the time of each abnormal trading, the company is also taken to have met the condition in paragraph 165-35(a).

See section 166-145 to work out whether there is substantial continuity of ownership.

166-20(4)
If there is *abnormal trading, and there is no *substantial continuity of ownership of the company as between the start of the *test period and the time of the abnormal trading, the company is taken to have failed to meet the condition in paragraph 165-35(a).

166-20(5)
However, if the company satisfies the *same business test for the rest of the income year (the same business test period ) after the first *abnormal trading covered by subsection (4), it is taken to have satisfied the condition in paragraph 165-35(b) (which is about the company carrying on the same business).

For the same business test: see Subdivision 165-E.

166-20(6)
Apply the *same business test to the *business that the company carried on immediately before the time of the first *abnormal trading (the test time ) covered by subsection (4).
How to work out the taxable income, tax loss, net capital gain and net capital loss  
166-25(1)
If the *listed public company must calculate its taxable income and *tax loss for the income year under Subdivision 165-B, and its *net capital gain and *net capital loss under Subdivision 165-CB, then, in dividing the income year into periods, apply subsection (2) instead of subsection 165-45(3).

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S 165-25(1) amended by No 46 of 1998.

166-25(2)
The last period ends at the end of the income year. Each period (except the last) ends at the earlier of:

(a) the earliest time when there is an *abnormal trading in *shares in the *listed public company (except one covered by subsection (3)); or

(b) the earliest time when a person begins to control, or becomes able to control, the voting power in the *listed public company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:

(i) getting some benefit or advantage to do with how this Act applies; or

(ii) getting such a benefit or advantage for someone else.

166-25(3)
In working out when a period ends, disregard an *abnormal trading if there is *substantial continuity of ownership of the company as between the start of the period and the time of the abnormal trading.

See section 166-145 to work out whether there is substantial continuity of ownership.

How Subdivisions 165-B and 165-CB apply to 100% subsidiary of a listed public company  
166-30(1)
This Subdivision also modifies the way Subdivision 165-B applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.

Note 1: Subdivision 165-B is about when a company must calculate its taxable income and tax loss for the income year in a special way.

Note 2: Subdivision 165-CB is about when a company must calculate its net capital gain and net capital loss for the income year in a special way.

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S 166-30(1) Note 2 inserted by No 46 of 1998.

166-30(2)
The company (the subsidiary ) must be a *100% subsidiary of another company (the holding company ) at all times during the income year of the subsidiary.

166-30(3)
Also, the holding company must be a *listed public company at all times during that income year.

166-30(4)
If the conditions are met then, for the purposes of applying Subdivisions 165-B and 165-CB to the subsidiary, this Subdivision applies to the subsidiary as if:

(a) the subsidiary were itself a *listed public company at all times during the income year; and

(b) an *abnormal trading in *shares in the holding company during the income year were an abnormal trading in shares in the subsidiary.

(Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)

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S 166-30(4) amended by No 46 of 1998.

Companies can choose that this Subdivision is not to apply to them  
166-35(1)
The *listed public company or subsidiary can choose that Subdivisions 165-B and 165-CB are to apply to it for the income year without the modifications made by this Subdivision.

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S 166-35(1) amended by No 46 of 1998.

166-35(2)
The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

Subdivision 166-C - Deducting bad debts

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Subdiv 166-C inserted by No 46 of 1998.

How Subdivision 165-C applies to a listed public company  
166-40(1)
This Subdivision modifies the way Subdivision 165-C applies to a company that is a *listed public company at all times during a period (the test period ) consisting of the *first continuity period, the *second continuity period and any intervening period.

Note 1: Subdivision 165-C is about the conditions a company must satisfy before it can deduct a bad debt.

Note 2: This Subdivision also modifies how Subdivision 165-C applies to a 100% subsidiary of a listed public company: see section 166-45.

Note 3: A company can choose that this Subdivision is not to apply to it: see section 166-50.

166-40(2)
The *listed public company is taken to have met the conditions in section 165-123 (about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between whichever of these times the company chooses:

(a) the start of the income year in which the debt was incurred;

(b) the start of the *test period;

and each of these other times in the test period:

(c) the time of each *abnormal trading in *shares in the company;

(d) the end of each income year.

See section 166-145 to work out whether there is substantial continuity of ownership.

166-40(3)
The *listed public company is taken to have failed to meet the conditions in section 165-123 if there is no *substantial continuity of ownership of the company as between the start of the *test period and one or more of the other times referred to in subsection (2).

166-40(4)
However, if the *listed public company satisfies the *same business test for the *second continuity period (the same business test period ), it is taken to have satisfied the condition in section 165-126 (which is about the company carrying on the same business).

For the same business test: see Subdivision 165-E.

166-40(5)
Apply the *same business test to the *business that the *listed public company carried on immediately before the first time (the test time ) covered by paragraph (2)(c) or (d) for which there was no *substantial continuity of ownership of the company as between the start of the *test period and that time.

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S 166-40(5) amended by No 142 of 2003 and No 114 of 2000.

S 166-40 inserted by No 46 of 1998.

How Subdivision 165-C applies to a 100% subsidiary of a listed public company  
166-45(1)
This Subdivision also modifies the way Subdivision 165-C applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.

Note: Subdivision 165-C is about the conditions a company must satisfy before it can deduct a bad debt for an earlier income year.

166-45(2)
The company (the subsidiary ) must be a *100% subsidiary of another company (the holding company ) at all times during a period consisting of:

(a) the *first continuity period of the subsidiary; and

(b) the *second continuity period of the subsidiary; and

(c) any intervening period.

166-45(3)
Also, the *holding company must be a *listed public company at all times during that period.

166-45(4)
If the conditions are met then, for the purposes of applying Subdivision 165-C to the subsidiary, this Subdivision applies to the subsidiary as if:

(a) the subsidiary were itself a *listed public company at all times during that period; and

(b) an *abnormal trading in *shares in the *holding company during that period were an abnormal trading in shares in the subsidiary.

(Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)

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S 166-45 inserted by No 46 of 1998.

Companies can choose that this Subdivision is not to apply to them  
166-50(1)
The *listed public company or subsidiary can choose that Subdivision 165-C is to apply to it for the income year without the modifications made by this Subdivision.

166-50(2)
The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

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S 166-50 inserted by No 46 of 1998.

Subdivision 166-CA - Change of ownership or control of listed public company

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Subdiv 166-CA inserted by No 89 of 2000.

How Subdivision 165-CC or 165-CD applies to a listed public company  
166-80(1)
This Subdivision modifies the way in which:

(a) Subdivision 165-CC applies in determining whether a changeover time (within the meaning of section 165-115C) has occurred; or

(b) Subdivision 165-CD applies in determining whether an alteration time (within the meaning of section 165-115L) has occurred;

in relation to a *listed public company during the period (the test period ) starting at the time that is the reference time for the purposes of Subdivision 165-CC or section 165-115L, as the case may be, and ending at a *test time.

Note 1: Subdivision 165-CC is about the conditions a company that has an unrealised net loss must satisfy before it can have capital losses taken into account or deduct revenue losses.

Note 2: Subdivision 165-CD provides for reductions in cost bases and certain other reductions after alterations have occurred in the ownership or control of a loss company.

Note 3: This Subdivision also modifies how Subdivision 165-CC and 165-CD apply to a 100% subsidiary of a listed public company: see section 166-85.

Note 4: A company can choose that this Subdivision is not to apply to it: see section 166-9.

166-80(2)
Each of the following times is a test time :

(a) the time immediately after an *abnormal trading of *shares in the company occurs;

(b) the end of the income year in which the relevant reference time occurred;

(c) the end of a later income year.

166-80(3)
If:

(a) the *listed public company was a listed public company throughout the *test period; and

(b) there is *substantial continuity of ownership of the *listed public company as between the start of the test period and the *test time;

a changeover time or an alteration time is taken not to have occurred in respect of the company during the test period.

Note: See section 166-145 to work out whether there is substantial continuity of ownership.

166-80(4)
If:

(a) the *listed public company was a listed public company throughout the *test period; and

(b) there is no *substantial continuity of ownership of the *listed public company as between the start of the test period and the *test time;

the following paragraphs have effect:

(c) the test time is taken to have been a changeover time or an alteration time, as the case may be, in respect of the company; but

(d) no other time during the test period is a changeover time or an alteration time, as the case may be, in respect of the company.

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S 166-80 inserted by No 89 of 2000.

How Subdivision 165-CC or 165-CD applies to a 100% subsidiary of a listed public company  
166-85(1)
This Subdivision modifies the way in which:

(a) Subdivision 165-CC applies in determining whether a changeover time (within the meaning of section 165-115C) has occurred; or

(b) Subdivision 165-CD applies in determining whether an alteration time (within the meaning of section 165-115L) has occurred;

in relation to a company (the subsidiary ) that is a subsidiary of a *listed public company (the holding company ) during the period (the test period ) starting at the time that is the reference time for the purposes of Subdivision 165-CC or section 165-115L, as the case may be, and ending at a *test time.

Note 1: Subdivision 165-CC is about the conditions a company that has an unrealised net loss must satisfy before it can have capital losses taken into account or deduct revenue losses.

Note 2: Subdivision 165-CD provides for reductions in cost bases and certain other reductions after alterations have occurred in the ownership or control of a loss company.

166-85(2)
Each of the following times is a test time :

(a) the time immediately after an *abnormal trading of *shares in the holding company or the subsidiary occurs;

(b) the end of the income year in which the relevant reference time occurred;

(c) the end of a later income year.

166-85(3)
If:

(a) the subsidiary was a *100% subsidiary of the holding company throughout the *test period; and

(b) the holding company was a *listed public company throughout the test period; and

(c) there is *substantial continuity of ownership of the subsidiary as between the start of the test period and the *test time;

a changeover time or an alteration time is taken not to have occurred in respect of the subsidiary during the test period.

Note: See section 166-145 to work out whether there is substantial continuity of ownership.

166-85(4)
If:

(a) the subsidiary was a *100% subsidiary of the holding company throughout the *test period; and

(b) the holding company was a *listed public company throughout the test period; and

(c) there is no *substantial continuity of ownership of the subsidiary as between the start of the test period and the *test time;

the following paragraphs have effect:

(d) the test time is taken to have been a changeover time or an alteration time, as the case may be, in respect of the subsidiary; but

(e) no other time during the test period is a changeover time or an alteration time, as the case may be, in respect of the subsidiary.

166-85(5)
Subdivisions 166-D, 166-F and 166-G apply to the subsidiary as if:

(a) the subsidiary were itself a *listed public company throughout the *test period; and

(b) an *abnormal trading in *shares in the holding company were an abnormal trading in shares in the subsidiary.

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S 166-85 inserted by No 89 of 2000.

Companies can choose that this Subdivision is not to apply to them  
166-90(1)
The *listed public company or subsidiary can choose that Subdivision 165-CC or 165-CD is to apply to it in respect of a *test period for the purposes of section 166-80 or 166-85 without the modifications made by this Subdivision.

166-90(2)
The *listed public company or subsidiary must choose on or before the day it lodges its *income tax return for the income year in which the *test period begins or before a later day if the Commissioner allows.

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S 166-90 inserted by No 89 of 2000.

Subdivision 166-D - Tests for finding out whether the listed public company has maintained the same owners

What this Subdivision is about  
166-140
This Subdivision has the tests to work out whether a listed public company has maintained the same owners as between different times.

Subdivisions 166-F and 166-G have rules which make it easier for the company to satisfy these ownership tests.

Note: The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

Substantial continuity of ownership  
166-145(1)
There is substantial continuity of ownership of the *listed public company as between the start of the *test period and another time in the test period if (and only if) the conditions in this section are met.

166-145(2)
There must be persons (none of them companies or trustees) who had *more than 50% of the voting power in the listed public company at the start of the *test period. Also, those persons must have had *more than 50% of the voting power in the listed public company immediately after the other time in the test period.

To work out who had more than 50% of the voting power: see section 166-150.

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S 166-145(2) amended by No 89 of 2000.

166-145(3)
There must be persons (none of them companies or trustees) who had rights to *more than 50% of the listed public company ' s dividends at the start of the *test period. Also, those persons must have had rights to *more than 50% of the listed public company ' s dividends immediately after the other time in the test period.

To work out who had rights to more than 50% of the listed public company ' s dividends: see section 166-155.

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S 166-145(3) amended by No 89 of 2000.

166-145(4)
There must be persons (none of them companies or trustees) who had rights to *more than 50% of the listed public company ' s capital distributions at the start of the *test period. Also, those persons must have had rights to *more than 50% of the listed public company ' s capital distributions immediately after the other time in the test period.

To work out who had rights to more than 50% of the listed public company ' s capital distributions: see section 166-160.

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S 166-145(4) amended by No 89 of 2000.

166-145(5)
To work out whether a condition in this section was satisfied at a time (the ownership test time ), apply the ownership test for that condition.
Who has more than 50% of the voting power in the listed public company at a particular time  
166-150
If it is the case, or it is reasonable to assume, that there are persons (none of them companies or trustees) who, at the *ownership test time, between them control, or are able to control, the voting power in the *listed public company (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the listed public company at that time.

Note: Subdivisions 166-F and 166-G modify how this test is applied in certain cases.

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S 166-150 amended by No 89 of 2000.

S 166-150 Note inserted by No 46 of 1998.

Who has rights to more than 50% of the listed public company ' s dividends at a particular time  
166-155
If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the *ownership test time, have between them the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities) more than 50% of any *dividends that the *listed public company may pay, those persons have rights to more than 50% of the listed public company ' s dividends at that time.

Note: Subdivisions 166-F and 166-G modify how this test is applied in certain cases.

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S 166-155 Note inserted by No 46 of 1998.

Who has rights to more than 50% of the listed public company ' s capital distributions at a particular time  
166-160
If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the *ownership test time, have between them the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities) more than 50% of any distribution of capital of the *listed public company, those persons have rights to more than 50% of the listed public company ' s capital distributions at that time.

Note: Subdivisions 166-F and 166-G modify how this test is applied in certain cases.

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S 166-160 Note inserted by No 46 of 1998.

Rules in Division 165 apply  
166-165(1)
The rules in the following provisions:

(a) section 165-175 (which is about how an ownership test can be satisfied by a single person);

(b) subsection 165-185(1) (which treats some shares as never having carried rights);

(c) subsection 165-190(1) (which treats some shares as always having carried rights);

(d) section 165-200 (which is about how other rules do not affect how *shares or rights are counted);

(e) section 165-205 (which deals with death of beneficial owners);

(f) subsection 165-207(2) (which treats the *trustee of a family trust as a beneficial owner of some rights);

also apply for the purposes of an ownership test in this Subdivision.

166-165(2)
The rules in the following provisions:

(a) section 165-180 (which is about arrangements affecting beneficial ownership of shares);

(b) subsection 165-185(2) (which treats some shares as never having carried rights);

(c) subsection 165-190(2) (which treats some shares as always having carried rights);

(d) section 165-195 (which disregards *redeemable shares);

also apply for the purposes of an ownership test in this Subdivision as if the reference to a particular time were a reference to the *ownership test time.

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S 166-165(2) amended by No 114 of 2000.

S 166-165 substituted by No 89 of 2000.

Rules about substantial continuity of ownership of 100% subsidiary of listed public company  
166-170(1)
This section has effect in applying this Subdivision to a *100% subsidiary (the subsidiary ) of a *listed public company (the holding company ) for the purpose of determining whether there was substantial continuity of ownership of the subsidiary as between the start of a *test period and another time in that period.

166-170(2)
There is no substantial continuity of ownership unless at all relevant times:

(a) the only *shares in the subsidiary that are taken into account are exactly the same shares and are held by the same persons; and

(b) the only interests in any entity (including shares in another company) interposed between the holding company and the subsidiary that are taken into account are exactly the same interests and are held by the same persons.

166-170(3)
If:

(a) a particular *share (an old share ) in a company of which the holding company, or an entity interposed between the subsidiary and the holding company, is the beneficial owner at the start of the *test period is divided into 2 or more new shares; and

(b) the holding company or entity becomes the beneficial owner of each of the new shares immediately after the division takes place and remains the beneficial owner until the end of that period;

the new shares are taken to be exactly the same shares as the old share.

166-170(4)
If:

(a) a particular unit (an old unit ) in a unit trust of which the holding company, or an entity interposed between the holding company and the subsidiary, is the holder at the start of the *test period is divided into 2 or more new units during that period; and

(b) the holding company or entity becomes the holder of each of the new units immediately after the division takes place and remains the holder until the end of that period;

the new units are taken to be exactly the same units as the old unit.

166-170(5)
If:

(a) a particular *share (an old share ) in a company of which the holding company, or an entity interposed between the subsidiary and the holding company, is the beneficial owner at the start of the *test period, and other shares (each of which is also called an old share ) in the company of which the holding company or entity is the beneficial owner at the start of that period, are consolidated into a new share during that period; and

(b) the holding company or entity becomes the beneficial owner of the new share immediately after the consolidation takes place;

the new share is taken to be exactly the same share as the old shares.

166-170(6)
If:

(a) a particular unit (an old unit ) in a unit trust of which the holding company, or an entity interposed between the subsidiary and the holding company, is the holder at the start of the *test period and other units (each of which is also called an old unit ) in the trust of which the holding company or entity is the holder at the start of that period are consolidated into a new unit; and

(b) the holding company or entity becomes the holder of the new unit immediately after the consolidation takes place;

the new unit is taken to be exactly the same unit as the old units.

166-170(7)
This section does not affect how *shares, and rights carried by shares, are counted for the purpose of determining:

(a) the total voting power in the subsidiary; or

(b) the total dividends that the subsidiary may pay; or

(c) the total distributions of capital of the subsidiary.

166-170(8)
If any of the conditions in section 166-145 have not been satisfied, those conditions are taken to have been satisfied if:

(a) they would have been satisfied except for the operation of subsection (2) of this section; and

(b) the subsidiary has information from which it would be reasonable to conclude that less than 50% of:

(i) the *tax loss; or

(ii) the *notional loss; or

(iii) the bad debt; or

(iv) the unrealised net loss (within the meaning of section 165-115E);

as the case requires, has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests held by the holding company in the subsidiary during the *test period.

166-170(9)
However, subsection (8) does not apply in relation to any of the conditions in section 166-145 in so far as those conditions have effect for the purpose of determining whether an alteration time (within the meaning of section 165-115M) has occurred.

166-170(10)
The happening of any *CGT event in relation to a direct or indirect equity interest in the subsidiary that results in the failure of the subsidiary to satisfy a condition in section 166-145 is taken, for the purposes of paragraph (8)(b), to have occurred during the *test period.

166-170(11)
For the purposes of subsections (8) and (10):

(a) the direct equity interests in the subsidiary are *shares in the subsidiary; and

(b) the indirect equity interests in the subsidiary are shares or other interests in entities interposed between the subsidiary and the holding company.

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S 166-170 inserted by No 89 of 2000.

Subdivision 166-F - How to treat shareholdings of less than 1%

What this Subdivision is about  
166-215
This Subdivision has rules which make it easier for the listed public company to satisfy the ownership tests in Subdivision 166-D.

All shareholdings of less than 1% in the company are treated as if they were held by a single notional entity. This means that the company does not have to trace through to the persons who beneficially own those shares.

A similar rule applies if another listed public company is interposed between the company and those persons. All shareholdings of less than 1% in the interposed company are treated as if they were held by a different single notional entity. This means that the company does not have to trace through to the persons who beneficially own those shares in the interposed company.

Note 1: The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

Note 2: The rules in this Subdivision do not apply if they would hide a failure by the company to maintain the same owners: see sections 166-250 and 166-255.

Shareholdings of less than 1% in the listed public company  
166-220
This Subdivision modifies how the ownership tests are applied to the *listed public company (the tested company ) if the company has:

(a) *voting shareholdings of less than 1%; or

(b) *dividend shareholdings of less than 1%; or

(c) *capital shareholdings of less than 1%.

For the ownership tests: see sections 166-150, 166-155 and 166-160.

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S 166-220 amended by No 68 of 2002.

Shareholdings of less than 1% in an interposed listed public company  
166-225(1)
This Subdivision also modifies how the ownership tests are applied to the tested company if another *listed public company (the interposed company ) meets the conditions in subsections (2) and (3).

For the ownership tests: see sections 166-150, 166-155 and 166-160.

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S 166-225(1) amended by No 68 of 2002.

166-225(2)
The *interposed company must be interposed between the tested company and persons (none of them companies) who:

(a) control (or are able to control) voting power in the tested company indirectly through the interposed company; or

(b) have the right to receive, for their own benefit and *indirectly through the interposed company, any *dividends the tested company may pay; or

(c) have the right to receive, for their own benefit and *indirectly through the interposed company, any distributions of capital of the tested company.

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S 166-225(2) amended by No 68 of 2002.

166-225(3)
The *interposed company must have:

(a) *voting shareholdings of less than 1%; or

(b) *dividend shareholdings of less than 1%; or

(c) *capital shareholdings of less than 1%.
Notional shareholder  
166-230(1)
The ownership tests in sections 166-150, 166-155 and 166-160 are applied to the tested company as if, at the *ownership test time, a single notional entity (the notional shareholder ):

(a) directly controlled the voting power in the tested company that is carried by each *voting shareholding of less than 1% in the company at that time; and

(b) had the right to receive, for its own benefit and directly:

(i) any *dividends the tested company may pay in respect of each *dividend shareholding of less than 1% in the company at that time; and

(ii) any distributions of capital of the tested company in respect of each *capital shareholding of less than 1% in the company at that time; and

(c) were a person (other than a company).

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S 166-230(1) amended by No 68 of 2002.

166-230(2)
The tests are also applied to the tested company as if, at the *ownership test time, for each *interposed company, a different single notional entity (the notional shareholder ):

(a) directly controlled the voting power in the interposed company that is carried by each *voting shareholding of less than 1% in the interposed company at that time; and

(b) had the right to receive, for its own benefit and directly:

(i) any *dividends the interposed company may pay in respect of each *dividend shareholding of less than 1% in the interposed company at that time; and

(ii) any distributions of capital of the interposed company in respect of each *capital shareholding of less than 1% in the interposed company at that time; and

(c) were a person (other than a company).

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S 166-230(2) amended by No 68 of 2002.

166-230(3)
The tests are also applied to the tested company as if, at the *ownership test time:

(a) the persons (other than companies) who control (or are able to control) the voting power in the tested company or *interposed company (whether directly, or indirectly through one or more interposed entities) that is carried by each *voting shareholding of less than 1% in the company had not had that control; and

(b) the persons (other than companies) who have the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities):

(i) any *dividends that the tested company or interposed company may pay in respect of each *dividend shareholding of less than 1% in the company; and

(ii) any distributions of capital of the tested company or interposed company in respect of each *capital shareholding of less than 1% in the company;

had not had that right.

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S 166-230(3) amended by No 68 of 2002 and No 114 of 2000.

Notional shareholder taken to have minimum voting control, dividend rights and capital rights  
166-235(1)
If the *ownership test time is after the start of the *test period and:

• the voting power in the tested company or *interposed company that the *notional shareholder controls at that time;

is greater than:

• the voting power in the company that the notional shareholder controlled at the start of that period;

the notional shareholder is taken to control voting power in the company at that time only to the extent that it controlled it at the start of that period.

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S 166-235(1) amended by No 68 of 2002.

166-235(2)
If the *ownership test time is after the start of the *test period and:

• the percentage of the *dividends or distributions of capital of the tested company or *interposed company that the *notional shareholder has the right to receive at that time;

is greater than:

• the percentage (the lower percentage ) of the dividends or distributions of capital of the company that the notional shareholder had the right to receive at the start of that period;

the notional shareholder is taken to have the right to receive the lower percentage of the dividends or distributions of capital at that time.

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S 166-235(2) amended by No 68 of 2002.

Voting, dividend and capital shareholding of less than 1%  
166-240(1)
If all the *shares in a company of which an entity is the registered holder at a particular time carry (between them) less than 1% of the voting power in the company, those shares (except shares that are *part of a substantial shareholding) constitute a voting shareholding of less than 1% in the company at that time.

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S 166-240(1) amended by No 46 of 1998.

166-240(2)
If all the *shares in a company of which an entity is the registered holder at a particular time carry (between them) the right to receive less than 1% of any *dividends that the company may pay, those shares (except shares that are *part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.

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S 166-240(2) amended by No 46 of 1998.

166-240(3)
If all the *shares in a company of which an entity is the registered holder at a particular time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are *part of a substantial shareholding) constitute a capital shareholding of less than 1% in the company at that time.

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S 166-240(3) amended by No 46 of 1998.

Shares that are part of a substantial shareholding  
166-245(1)
*Shares in a company begin to be part of a substantial shareholding of a person when the person gives the company:

(a) a notice under section 671B of the Corporations Act 2001 from which it appears that the person or an associate (within the meaning of that section) had a *relevant interest in the shares as at the day when the person became a substantial shareholder in the company; or

(b) a notice under section 671B of the Corporations Act 2001 from which it appears that the person or an associate (within the meaning of that section) had a *relevant interest in the shares after the change in relevant interests because of which the notice had to be given;

whichever happens first.

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S 166-245(1) amended by No 55 of 2001 and No 156 of 1999.

166-245(2)
The *shares stop being *part of the substantial shareholding when the person gives the company:

(a) a notice under section 671B of the Corporations Act 2001 from which it appears that neither the person nor an associate (within the meaning of that section) had a *relevant interest in the shares after the change in relevant interests because of which the notice had to be given; or

(b) a notice under section 671B of the Corporations Act 2001 from which it appears that the person has stopped being a substantial shareholder in the company;

whichever happens first.

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S 166-245(2) amended by No 55 of 2001, No 114 of 2000 and No 156 of 1999.

Limit on listed public company splitting its shares into different classes  
166-250
This Subdivision does not apply unless, at the *ownership test time, all the *voting shares in the tested company carry (between them):

(a) the right to receive more than 75% of any *dividends the tested company may pay; and

(b) the right to receive more than 75% of any distributions of capital of the tested company.

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S 166-250 amended by No 68 of 2002.

If listed public company would not have otherwise passed the ownership tests  
166-255
This Subdivision does not apply for the purposes of section 166-5 or 166-20 if the Commissioner considers it reasonable to assume that the tested company would not meet the conditions in that section if it were not for the rules in this Subdivision.

Note: The conditions in sections 166-5 and 166-20 require the listed public company to maintain the same owners at each ownership test time during the test period.

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S 166-255 amended by No 68 of 2002.

Subdivision 166-G - How to treat interposed superannuation funds, approved deposit funds and special companies

What this Subdivision is about  
166-260
This Subdivision has rules which make it easier for the listed public company to satisfy the ownership tests in Subdivision 166-D.

The company does not have to trace through any complying superannuation funds, complying approved deposit funds or special companies that are interposed between the company and persons who control any of the voting power in the company, or who have rights to its dividends or capital.

Note: The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

When fund or special company is taken to control voting power  
166-265(1)
This section modifies how the ownership test in section 166-150 (about control of voting) is applied to the *listed public company if:

(a) a *superannuation fund, *approved deposit fund or *special company is interposed, at the *ownership test time, between persons (none of them companies or trustees) and the listed public company; and

(b) at the ownership test time, those persons control (or are able to control) any of the voting power in the listed public company indirectly through the fund or special company (or through entities including it); and

(c) at all times during the income year of the listed public company in which the ownership test time occurs:

(i) the superannuation fund is a *complying superannuation fund or a *foreign superannuation fund; or

(ii) the approved deposit fund is a *complying approved deposit fund; or

(iii) the special company is a special company.

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S 166-265(1) amended by No 89 of 2000 and No 16 of 1998.

166-265(2)
If the fund or *special company has more than 50 *members, the test is applied as if, at the *ownership test time, the fund or special company were a person (other than a company or a trustee) who controlled the voting power in the *listed public company that those persons control (or are able to control).

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S 166-265(2) amended by No 89 of 2000.

166-265(3)
However, if the fund or *special company has 50 *members or less, the test is applied as if, at the *ownership test time, each member were a person (other than a company or a trustee) who controlled an equal proportion of the voting power in the *listed public company that those persons control (or are able to control).

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S 166-265(3) amended by No 89 of 2000.

166-265(4)
The test is applied as if, at the *ownership test time, the voting power in the *listed public company that those persons control (or are able to control) were not controlled by them (except as provided by subsection (3)).
When fund or special company is taken to have rights to dividends and capital  
166-270(1)
This section modifies how the ownership test in section 166-155 (about *dividend rights) or 166-160 (about capital rights) is applied to the *listed public company if:

(a) a *superannuation fund, *approved deposit fund or *special company is interposed, at the *ownership test time, between persons (none of them companies) and the listed public company; and

(b) at the ownership test time, those persons have the right to receive for their own benefit, and *indirectly through the fund or special company (or through entities including it):

(i) a percentage of any *dividends that the listed public company may pay; or

(ii) a percentage of any distributions of capital of the listed public company; and

(c) at all times during the income year of the listed public company in which the ownership test time occurs:

(i) the superannuation fund is a *complying superannuation fund or a *foreign superannuation fund; or

(ii) the approved deposit fund is a *complying approved deposit fund; or

(iii) the special company is a special company.

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S 166-270(1) amended by No 16 of 1998.

166-270(2)
If the fund or *special company has more than 50 *members, the test is applied as if, at the *ownership test time, the fund or special company were a person (other than a company) who had the right to receive, for the person ' s own benefit, that percentage of those *dividends or distributions of capital of the *listed public company.

166-270(3)
However, if the fund or *special company has 50 *members or less, the test is applied as if, at the *ownership test time, each member were a person (other than a company) who had a right to receive, for the person ' s own benefit, an equal proportion of that percentage of those *dividends or distributions of capital.

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S 166-270(3) amended by No 46 of 1998.

166-270(4)
The test is applied as if, at the *ownership test time, the persons (other than companies) who have the right to receive that percentage of those *dividends or distributions of capital did not have that right (except as provided by subsection (3)).

Subdiv 166-A inserted by No 147 of 2005, s 3 and Sch 1 item 79, effective 14 December 2005. For application provision and wording of former Div 166, see note under Div 166 heading.

S 166-5(5) amended by No 7 of 2019, s 3 and Sch 1 items 86 and 87, by substituting " *business continuity test for the income year (the business continuity test period ) " for " *same business test for the income year (the same business test period ) " and " business continuity test " for " same business test " in note 1, effective 1 April 2019 and applicable in relation to income years starting on or after 1 July 2015.

S 166-5(5) amended by No 164 of 2007 , s 3 and Sch 6 items 29 and 30, by repealing note 2 and substituting " Note 2 " for " Note 3 " in note 3, applicable to:

(a) any tax loss that is incurred in an income year commencing on or after 1 July 2005; and

(b) any net capital loss that is made in an income year commencing on or after 1 July 2005; and

(c) any deduction in respect of a bad debt that is incurred in an income year commencing on or after 1 July 2005.

Note 2 formerly read:

Note 2:

Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for that year: see section 165-212A .

S 166-5(6) amended by No 7 of 2019, s 3 and Sch 1 item 88, by substituting " *business continuity test " for " *same business test " , effective 1 April 2019 and applicable in relation to income years starting on or after 1 July 2015.

S 166-5 inserted by No 147 of 2005, s 3 and Sch 1 item 79, effective 14 December 2005. For application provision and wording of former Div 166, see note under Div 166 heading.