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

7   Subsection 118-425(3)

Repeal the subsection, substitute:

Predominant activity

(3) The company must satisfy at least 2 of these requirements:

(a) more than 75% of the company’s assets (determined by value) must be used primarily in activities that are not ineligible activities mentioned in subsection (13);

(b) more than 75% of the company’s employees must be engaged primarily in activities that are not ineligible activities mentioned in subsection (13);

(c) more than 75% of the company’s total assessable income, *exempt income and *non-assessable non-exempt income must come from activities that are not ineligible activities mentioned in subsection (13).

Note 1: This requirement is ongoing. It is not limited to the circumstances at the time the investment was made.

Note 2: See subsection (10) for the value of assets.

Note 3: A company that fails to meet at least 2 of the requirements can still be eligible if the PDF Board determines that the company’s primary activity is not ineligible and the failure is temporary: see subsection (14).