Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS

Division 167 - Companies whose shares carry unequal rights to dividends, capital distributions or voting power

History

Div 167 inserted by No 130 of 2015, s 3 and Sch 4 item 1, effective 17 September 2015. No 130 of 2015, s 3 and Sch 4 item 53 contains the following application provision:

167-1 Application of provisions
167-1(1)
Division 167 of the Income Tax Assessment Act 1997 applies:

(a) to any tax loss that is incurred in an income year commencing on or after 1 July 2002; and

(b) to any net capital loss that is made in an income year commencing on or after 1 July 2002; and

(c) to any deduction in respect of a bad debt that is claimed in an income year commencing on or after 1 July 2002; and

(d) in determining whether any changeover time or alteration time occurred on or after 1 July 2002.

167-1(2)
Division 167 of the Income Tax Assessment Act 1997 also applies:

(a) to any tax loss of a company:

(i) that is incurred in an income year commencing on or before 30 June 2002; and

(ii) that could have been deducted, in accordance with Divisions 165 and 166 of that Act as in force at that time, in the first income year commencing after 30 June 2002 if the deduction had not been limited by the company ' s income for that income year; and

(b) to any net capital loss of a company:

(i) that is made in an income year commencing on or before 30 June 2002; and

(ii) that could have been applied, in accordance with Divisions 165 and 166 of that Act as in force at that time, in the first income year commencing after 30 June 2002 if the application of the loss had not been limited by the company ' s capital gains for that income year.

Subdivision 167-A - Rights to dividends or capital distributions

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Operative provisions

SECTION 167-25 Third way - treat remaining shares as having fixed rights to dividends and capital distributions

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When this section applies

167-25(1)
This section applies if, despite sections 167-15 and 167-20 , the unsatisfied condition cannot be worked out for the test period or test time (as appropriate).

How to fix rights to dividends and capital distributions

167-25(2)
The unsatisfied condition may be reconsidered by applying subsections (3) and (4) to each unequally structured company. When doing this for an unsatisfied condition listed in subsection 167-10(1) , assume:

(a) that the test period consists only of the valuing times worked out under section 167-40 ; and

(b) that each of those valuing times is a test time.

167-25(3)
Firstly, disregard any *debt interests in that company and any of its *shares that can be disregarded under subsection 167-20(3) .

167-25(4)
Secondly, treat each of that company ' s remaining *shares *on issue at the test time as having at that time the percentage of the rights to receive *dividends, and capital distributions, worked out either:

(a) under section 167-30 ; or

(b) under section 167-35 if:

(i) it is not reasonably practicable to work out the market values of each of those remaining shares; or

(ii) the sum of the *market values of all of those remaining shares is nil.

Note:

The remaining shares are those remaining after disregarding the shares mentioned in subsection (3).

Evidence of a choice under this section

167-25(5)
The way an entity prepares its *income tax return is sufficient evidence of it choosing to work out the unsatisfied condition under this section.

View history note

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