INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 3CC - How to treat shareholdings of less than 1%  

Special tracing rules for listed public companies  

SECTION 160ZNSO   NOTIONAL SHAREHOLDER  

160ZNSO(1)   Notional shareholder of the head company.  

The ownership tests in sections 160ZNSH , 160ZNSI and 160ZNSJ are applied to the head company as if, at the ownership test time, a single notional entity (the notional shareholder ):

(a) directly controlled the voting power in the head 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 head 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 head 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).

160ZNSO(2)   Notional shareholder of the interposed company.  

The tests are also applied to the head 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).

160ZNSO(3)   Persons who actually control or have rights are taken not to.  

The tests are also applied to the head 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 head 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 head 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 head company or interposed company in respect of each capital shareholding of less than 1% in the company;

had not had that right.