INCOME TAX ASSESSMENT ACT 1997 - SECT 208.155 Eligible continuing substantial member

INCOME TAX ASSESSMENT ACT 1997 - SECT 208.155

  (1)   A * member of a * former exempting entity is an eligible continuing substantial member in relation to a * distribution made by the entity if the following provisions apply.

  (2)   At both the time when the * distribution was made, and the time immediately before the entity ceased to be an * exempting entity, the * member was entitled to not less than 5% of:

  (a)   where the entity is a company:

  (i)   if the voting shares (as defined in the Corporations Act 2001 ) in the relevant former exempting entity are not divided into classes--those voting shares; or

  (ii)   if the voting shares (as so defined) in the relevant former exempting entity are divided into 2 or more classes--the shares in one of those classes; and

  (b)   where the entity is a * public trading trust--the units in the trust; and

  (c)   where the entity is a * corporate limited partnership--the income of the partnership.

  (3)   At both the time when the * distribution was made, and the time immediately before the entity ceased to be an * exempting entity, the * member was a person referred to in one or more of the following paragraphs:

  (a)   a person who is a foreign resident;

  (b)   a * life insurance company;

  (c)   an exempting entity;

  (d)   a * former exempting entity;

  (e)   a trustee of a trust in which an interest was held by a person referred to in any of paragraphs   (a) to (d);

  (f)   a partnership in which an interest was held by a person referred to in any of paragraphs   (a) to (d).

  (4)   If the assumptions set out in subsection   (5) are made:

  (a)   if the * member was a person referred to in any of paragraphs   (3)(a) to (d)--the member; or

  (b)   if the member was a trustee of a trust or a partnership, being a trust or partnership in which a person referred to in any of those paragraphs held an interest--the holder of the interest;

would (if a foreign resident) be exempt from * withholding tax on the distribution or (if an Australian resident) be entitled to a * franking credit or a * tax offset in respect of the distribution.

  (5)   The assumptions referred to in subsection   (4) are that:

  (a)   the relevant former exempting entity was an * exempting entity at the time it made the * distribution; and

  (b)   the distribution was a * franked distribution made to the member; and

  (c)   if the * member was a * former exempting entity--the member was an exempting entity; and

  (d)   if the member was a trustee of a trust or partnership in which a former exempting entity had an interest--the former exempting entity was an exempting entity.

  (6)   A person is taken to hold an interest in a trust, for the purposes of paragraph   (3)(e), if:

  (a)   the person is a beneficiary under the trust; or

  (b)   the person * derives, or will derive, income indirectly, through interposed trusts or partnerships, from * distributions received by the trustee.

  (7)   A person is taken to hold an interest in a partnership, for the purposes of paragraph   (3)(f), if:

  (a)   the person is a partner in the partnership; or

  (b)   the person * derives, or will derive, income indirectly, through interposed trusts or partnerships, from * distributions received by the partnership.