Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 16J - Effect of cancellation of subsidiary's shares in holding company  

SECTION 159GZZZF   EFFECT ON SUBSIDIARY OF SHARE CANCELLATIONS TO WHICH THIS DIVISION APPLIES  

159GZZZF(1)   [Capital proceeds in respect of cancellation]  

Where:

(a) this Division applies to a cancellation of shares; and

(b) apart from this section, either:

(i) the subsidiary concerned would not receive or be entitled to receive any capital proceeds in respect of the cancellation; or

(ii) the capital proceeds that the subsidiary concerned would receive or be entitled to receive in respect of the cancellation would be less than the adjusted market value of the shares;

the following provisions have effect for the purposes of this Act:

(c) where subparagraph (b)(i) applies - the subsidiary shall be taken to have received or to be entitled to receive, as capital proceeds in respect of the cancellation, an amount equal to the adjusted market value of the shares;

(d) where subparagraph (b)(ii) applies - the amount of the capital proceeds that the subsidiary receives or is entitled to receive in respect of the cancellation shall be taken to be increased by an amount so that it equals the adjusted market value of the shares.

159GZZZF(2)   [Adjusted market value]  

For the purposes of subsection (1), the adjusted market value of the shares is the amount that would have been their market value at the time of the cancellation if the cancellation did not occur and was never proposed to occur.