Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 235 - Particular financial transactions  

Subdivision 235-I - Instalment trusts  

Operative provisions

SECTION 235-835   Requirement for underlying investments to be listed or widely held  

235-835(1)    
A trust satisfies the requirements in this section if:

(a) each asset that is, or is part of, the underlying investment is:

(i) a *share, a unit in a unit trust or a stapled security; or

(ii) an interest in an entity that holds an interest in a share, a unit in a unit trust or a stapled security either directly, or indirectly through one or more interposed entities; and

(b) each such share, unit or stapled security:

(i) is listed for quotation in the official list of an *approved stock exchange; or

(ii) meets the widely held requirement set out in the applicable item of the following table.

Widely held requirements
Item	Column 1 Type of asset	Column 2 Widely held requirement
1	A *share in a company	The company is a *widely held company
2	A unit in a unit trust	The unit trust is a widely held unit trust as defined in section 272-105 in Schedule 2F to the Income Tax Assessment Act 1936
3	A stapled security	All companies involved are *widely held companies and all trusts involved are such widely held unit trusts

235-835(2)    
A *share, unit in a unit trust or a stapled security that fails the widely held requirement set out in the table in subsection (1) is treated as satisfying that requirement if the failure:

(a) is of a temporary nature only; and

(b) is caused by circumstances outside the investor ' s control.

235-835(3)    
In applying subsection (1), disregard an asset, or the cash proceeds from disposing of an asset, if:

(a) the trustee became entitled to the asset in respect of a *share, unit or stapled security that was, or was part of, the underlying investment just before the entitlement arose; and

(b) the asset is not a *share, unit in a unit trust, or stapled security; and

(c) if the asset is an interest in an entity, or a right, option or similar interest that gives the holder an entitlement to acquire an interest in an entity:

(i) an interest in the entity is listed for quotation in the official list of an *approved stock exchange; or

(ii) the entity meets a widely held requirement set out in column 2 of item 1 or 2 of the table in subsection (1); and

(d) the underlying investment comprises one or more other assets that are not disregarded under this subsection.

Example:

Examples of the types of assets disregarded by this subsection are:

(a) assets that represent distributions and capital payments in respect of the underlying investment; and

(b) bonus rights issued in respect of the underlying investment.

235-835(4)    
Despite subsections (1) to (3), the underlying investment does not satisfy the requirement in this section if an asset that is, or is part of, the underlying investment is an *ESS interest to which Subdivision 83A-B or 83A-C (about employee share schemes) applies.