Tax Laws Amendment (2006 Measures No. 3) Act 2006 (80 of 2006)

Schedule 4   Simplified imputation system (share capital tainting rules)

Part 3   Amendment of the old share capital tainting rules

Division 1   Amendments

Income Tax Assessment Act 1936

17   After subsection 160ARDM(4)

Insert:

(4A) If:

(a) an amount is transferred as mentioned in subsection (1); and

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

(c) the demutualisation is implemented in accordance with a demutualisation method specified in Division 9AA of Part III; and

(d) the transfer occurs within the listing period in relation to the demutualisation (see subsection 121AE(6)); and

(e) the company (the issuing company ) to whose share capital account the amount is transferred is:

(i) if the demutualisation method is the method specified in section 121AF or 121AG - the demutualising company; or

(ii) if the demutualisation method is the method specified in section 121AH, 121AI, 121AJ, 121AK or 121AL - the company issuing the ordinary shares referred to in that section;

the following provisions have effect:

(f) if the sum of:

(i) the transferred amount; and

(ii) all amounts that were previously transferred to the issuing company's share capital account, from another account of the company, in connection with the demutualisation; and

(iii) all amounts that were previously transferred to the issuing company's retained profit account in connection with the demutualisation;

does not exceed the listing day company valuation amount (as defined in subsection (6)), subsection (1) does not apply to the transferred amount;

(g) if the sum of the amounts referred to in paragraph (f) exceeds the listing day company valuation amount (as defined in subsection (6)), subsection (1) applies only to the excess.

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

(4B) If:

(a) a life assurance company (the demutualised company ) has demutualised; and

(b) the demutualisation was implemented in accordance with a demutualisation method specified in Division 9AA of Part III; and

(c) an amount is transferred as mentioned in subsection (1); and

(d) the amount is transferred after the end of the listing period in relation to the demutualisation (see subsection 121AE(6)); and

(e) the company transferring the amount to its share capital account is either:

(i) the demutualised company (whichever demutualisation method was used); or

(ii) if the demutualisation method was the method specified in section 121AH, 121AI, 121AJ, 121AK or 121AL - the company (the issuing company ) that issued the ordinary shares referred to in that section; and

(f) if subparagraph (e)(i) applies - the following conditions are satisfied in relation to the transferred amount:

(i) the amount is transferred from an account of the demutualised company consisting of shareholders' capital (within the meaning of the Life Insurance Act 1995) in relation to a statutory fund (within the meaning of that Act);

(ii) the amount was part of such an account at the time of the demutualisation; and

(g) if subparagraph (e)(ii) applies - the amount is transferred from a capital reserve created at the time of or in connection with the demutualisation;

the following provisions have effect:

(h) if the sum of:

(i) the transferred amount; and

(ii) all amounts that were previously transferred to the demutualised company's share capital account, from another account of the demutualised company, as described in paragraphs (c) to (g); and

(iii) if the demutualisation method was the method specified in section 121AH, 121AI, 121AJ, 121AK or 121AL - all amounts that were previously transferred to the issuing company's share capital account, from another account of the issuing company, as described in paragraphs (c) to (g); and

(iv) all amounts that were previously transferred, in connection with the demutualisation, to the share capital account of the issuing company (within the meaning of subsection (4A)) as described in paragraphs (4A)(b) to (e), or to its retained profit account as described in subparagraph (4A)(f)(iii);

does not exceed the listing day company valuation amount (as defined in subsection (6)), subsection (1) does not apply to the transferred amount;

(i) if the sum of the amounts referred to in paragraph (h) exceeds the listing day company valuation amount (as defined in subsection (6)), subsection (1) applies only to the excess.

Note: If there are several transfers of amounts to the share capital account of the demutualised company or the issuing company, this subsection must be applied separately in relation to each transferred amount, in the order in which the transfers are made.