Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-A - What transfers into a company ' s share capital account does this Division apply to?  

SECTION 197-30   Exclusion for transfers made in connection with demutualisations of non-insurance etc. companies  

197-30(1)    
Subject to subsection (2), this Division does not apply to the transferred amount if:

(a) the amount is transferred in connection with a demutualisation of the company; and

(b) Division 326 in Schedule 2H to the Income Tax Assessment Act 1936 applies to the demutualisation; and

(c) the transfer occurs within the limitation period in relation to the demutualisation (see subsection 326-20(3) in that Schedule).

197-30(2)    
If the sum of:

(a) the transferred amount; and

(b) any other amounts that were previously transferred to the company ' s *share capital account, from another account of the company, in connection with the demutualisation;

exceeds the total capital contributions amount described in whichever of subsections (3) and (4) applies, subsection (1) does not stop this Division from applying to so much of the transferred amount as equals the lesser of the transferred amount and the amount of the excess.

Note:

If there are several transfers of amounts to the company ' s share capital account in connection with the demutualisation, this section must be applied separately in relation to each transferred amount, in the order in which the transfers are made.

197-30(3)    
If the company was not formed by the merger of 2 or more mutual entities, the total capital contributions amount referred to in subsection (2) is the sum of all the capital amounts:

(a) that were contributed to the company by *members of the company before its demutualisation; and

(b) in respect of which deductions are not allowable to the members; and

(c) that were not payments for goods or services provided by the company.

197-30(4)    
If the company was formed by the merger of 2 or more mutual entities, the total capital contributions amount referred to in subsection (2) is the sum of:

(a) all the capital amounts:

(i) that were contributed to the company, before its demutualisation, by persons who became *members of the company at or after the time when the merger took place; and

(ii) in respect of which deductions are not allowable to those members; and

(iii) that were not payments for goods or services provided by the company; and

(b) the *market values, at the time of the merger, of the entities that merged to form the company, as determined by a qualified valuer.