CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-90
-
CONSOLIDATED GROUPS
History
Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Division 719
-
MEC groups
History
Div 719 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Subdivision 719-B
-
MEC groups and their members
History
Subdiv 719-B heading inserted by No 117 of 2002, s 3 and Sch 8 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Basic concepts
SECTION 719-30
Treating entities as wholly-owned subsidiaries by disregarding employee shares
719-30(1)
The object of this section is to ensure that an entity is not prevented from being a
*
wholly-owned subsidiary of another entity, just because there are minor holdings of
*
membership interests in an entity issued under
*
arrangements for employee shareholdings.
History
S 719-30(1) amended by
No 56 of 2007
, s 3 and Sch 3 item 27, by substituting
"
*membership interests in an entity
"
for
"
*share in a company
"
, effective 12 April 2007.
No 56 of 2007
, s 3 and Sch 3 item 39 contains the following application provision:
(1)
The amendment applies to acquisitions of stapled securities, and of rights to acquire stapled securities, on or after 1 July 2006.
(2)
In this item:
acquisition
has the same meaning as in Division
13A
of Part
III
of the
Income Tax Assessment Act 1936
.
719-30(2)
For the purposes of this Division, in determining whether an entity is a *wholly-owned subsidiary of another entity, disregard:
(a)
particular *shares in a company if the shares are covered by subsection (3) and the total number of those shares is not more than 1% of the number of ordinary shares in the company; and
(b)
particular *membership interests in an entity if the membership interests are covered by subsection (5) and the total number of those membership interests is not more than 1% of the number of membership interests of that kind in the entity.
History
S 719-30(2) substituted by
No 56 of 2007
, s 3 and Sch 3 item 28, effective 12 April 2007.
No 56 of 2007
, s 3 and Sch 3 item 39 contains the following application provision:
(1)
The amendment applies to acquisitions of stapled securities, and of rights to acquire stapled securities, on or after 1 July 2006.
(2)
In this item:
acquisition
has the same meaning as in Division
13A
of Part
III
of the
Income Tax Assessment Act 1936
.
S 719-30(2) formerly read:
719-30(2)
For the purposes of this Division, in determining whether an entity is a wholly-owned subsidiary of another entity, disregard particular
*
shares in a company if:
(a)
the shares are covered by subsection (3); and
(b)
the total number of those shares is not more than 1% of the number of ordinary shares in the company.
719-30(3)
A *share or *membership interest in a company is covered by this subsection if:
(a)
the entity who holds the beneficial interest in the share or membership interest acquired that beneficial interest:
(i)
under an *employee share scheme; or
(ii)
by exercising a right, a beneficial interest in which was acquired under an employee share scheme; and
(b)
paragraphs
83A-105(1)(a)
and (b) and subsection
83A-105(2)
apply to the beneficial interest acquired under the scheme; and
(c)
in the case of a membership interest
-
the interest is part of a stapled security.
History
S 719-30(3) substituted for s 719-30(3), (4) and (5) by No 133 of 2009, s 3 and Sch 1 item 58, applicable in relation to the ESS interests mentioned in subsections
83A-5(1)
and
(2)
of the
Income Tax (Transitional Provisions) Act 1997
. S 719-30(3) formerly read:
719-30(3)
A
*
share in a company is covered by this subsection if the share is beneficially owned by an entity and:
(a)
the entity acquired (as defined in section
139G
of the
Income Tax Assessment Act 1936
) the share either:
(i)
in the circumstances described in subsection
139C(1) or (2)
of that Act; or
(ii)
by exercising a right the entity acquired (as so defined) in those circumstances; and
(b)
all the shares in the company available for acquisition in those circumstances are ordinary shares and all the rights available for acquisition in those circumstances are rights to acquire ordinary shares; and
(c)
if the entity acquired the share in those circumstances
-
at the time of the acquisition, at least 75% of the permanent employees (as defined in section
139GB
of that Act) of the employer (as defined in section
139GA
of that Act) were or had earlier been entitled to acquire in those circumstances:
(i)
shares in the company or rights to acquire shares in the company; or
(ii)
shares in a holding company (as defined in section
139GC
of that Act) of the company or rights to acquire such shares; and
(d)
the conditions in subsections 139CD(6) and (7) of that Act are met in relation to the acquisition of the share by the entity; and
(e)
the company is not covered by section
139DF
of that Act.
Note:
Section
139CD
of the
Income Tax Assessment Act 1936
sets out certain preconditions for shares and rights acquired under employee share schemes to be qualifying shares and qualifying rights. Section
139C
of that Act explains when a share or right is acquired under an employee share scheme. Section 139DF prevents shares and rights relating to certain companies from being qualifying shares and rights.
719-30(4)
(Repealed by No 133 of 2009)
History
S 719-30(3) substituted for s 719-30(3), (4) and (5) by No 133 of 2009, s 3 and Sch 1 item 58, applicable in relation to the ESS interests mentioned in subsections
83A-5(1)
and
(2)
of the
Income Tax (Transitional Provisions) Act 1997
. S 719-30(4) formerly read:
719-30(4)
A
*
share may be disregarded under subsection (2) even though the condition in paragraph (3)(c) is not met, if the Commissioner has made a determination under subsection
139CD(8)
of the
Income Tax Assessment Act 1936
in relation to the share.
719-30(5)
(Repealed by No 133 of 2009)
History
S 719-30(3) substituted for s 719-30(3), (4) and (5) by No 133 of 2009, s 3 and Sch 1 item 58, applicable in relation to the ESS interests mentioned in subsections
83A-5(1)
and
(2)
of the
Income Tax (Transitional Provisions) Act 1997
. S 719-30(5) formerly read:
719-30(5)
A *membership interest of a particular kind in an entity that is beneficially owned by another entity is covered by this subsection if:
(a)
the membership interest forms part of a stapled security (within the meaning of Division
13A
of Part
III
of the
Income Tax Assessment Act 1936
); and
(b)
the stapled security is treated as a *qualifying share because of Subdivision
DB
of that Division.
Note:
The kinds of membership interest that form part of a stapled security are an ordinary share and one or more other interests that are either shares or units in a unit trust: see section
139GCD
of the
Income Tax Assessment Act 1936
.
S 719-30(5) inserted by
No 56 of 2007
, s 3 and Sch 3 item 29, effective 12 April 2007.
No 56 of 2007
, s 3 and Sch 3 item 39 contains the following application provision:
(1)
The amendment applies to acquisitions of stapled securities, and of rights to acquire stapled securities, on or after 1 July 2006.
(2)
In this item:
acquisition
has the same meaning as in Division
13A
of Part
III
of the
Income Tax Assessment Act 1936
.
S 719-30 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
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