Tax Laws Amendment (2004 Measures No. 3) Act 2004 (105 of 2004)

Schedule 1   Venture capital

Part 1   Tax amendments

Income Tax Assessment Act 1997

13   At the end of section 118-440

Add:

(3) In applying paragraphs (1)(b), (5)(b) and (7)(c), ignore the total value of the assets of an entity that is *connected with the entity first-mentioned in subsection (1) (the target entity ) either immediately before or immediately after the investment referred to in that subsection if it is so connected only because of *eligible venture capital investments made in both of those entities by the same *VCLP, *AFOF or *eligible venture capital investor.

(4) In applying paragraphs (1)(b), (5)(b) and (7)(c), ignore the total value of the assets of an entity that, immediately after the investment is made, is not *connected with the target entity.

(5) Despite the previous provisions of this section, the target entity exceeds the permitted entity value immediately before the time (the investment time ) when the *VCLP, *AFOF or *eligible venture capital investor made the investment in the target entity if:

(a) the target entity was *connected with an entity (the linked entity ) in which the VCLP, AFOF or eligible venture capital investor had made an *eligible venture capital investment at some time in the period of 12 months before the investment time; and

(b) the sum of the total value of the assets of the target entity and of any entity *connected with the target entity (at the investment time) and the linked entity and of any entity connected with the linked entity (at the time that the entity making the investment made its investment in the linked entity) exceeds $250 million.

(6) The Commissioner may determine that subsection (5) does not apply if the Commissioner is satisfied that:

(a) the activities of the target entity are not the same as, not an integral part of and not a necessary support for the activities of the linked entity; and

(b) the making of the investment in the target entity is not part of a *scheme to acquire interests in all or a substantial part of a group of companies that are *connected with each other.

(7) Despite the previous provisions of this section, the target entity exceeds the permitted entity value immediately before the investment time if:

(a) the target entity was *connected with an entity (also the linked entity ) in which the *VCLP, *AFOF or *eligible venture capital investor had made an *eligible venture capital investment more than 12 months before the investment time; and

(b) the activities of the target entity are the same as, are an integral part of or are a necessary support for the activities of the linked entity; and

(c) the sum of the total value of the assets of the target entity and of any entity *connected with the target entity (at the investment time) and the linked entity and of any entity connected with the linked entity (at the time that the entity making the investment made its investment in the linked entity) exceeds $250 million.

(8) In applying paragraphs (5)(b) and (7)(c), ignore the total value of the assets of an entity that is *connected with the linked entity either immediately before or immediately after the investment in the linked entity if it is so connected only because of *eligible venture capital investments made in both of those entities by the same *VCLP, *AFOF or *eligible venture capital investor.