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INCOME TAX ASSESSMENT ACT 1997 - SECT 727.250 Distribution by an entity to a member or beneficiary

INCOME TAX ASSESSMENT ACT 1997 - SECT 727.250

Distribution by an entity to a member or beneficiary

  (1)   An * indirect value shift does not have consequences under this Division if:

  (a)   the * greater benefits consist entirely of:

  (i)   a distribution of income or capital that the * losing entity makes to the * gaining entity; or

  (ii)   a right to a distribution of income or capital that the losing entity is to make to the gaining entity;

    because the gaining entity holds * primary equity interests in the losing entity; and

  (b)   either:

  (i)   an amount covered by one or more of subsections   (2), (3) and (4); or

  (ii)   the total of 2 or more such amounts;

    equals or exceeds the amount of the distribution.

Conditions

  (2)   This subsection covers an amount that the assessable income or exempt income of the gaining entity for any income year includes because of the distribution or right.

  (3)   This subsection covers an amount by which the * cost base or * reduced cost base (or both) of some or all of the * primary equity interests referred to in subsection   (1) changes because of the distribution or right.

  (4)   This subsection covers an amount that, because of the distribution or right, is taken into account:

  (a)   under section   116 - 20 in working out the * capital proceeds of a * CGT event that happens during any income year to some or all of the * primary equity interests referred to in subsection   (1); or

  (b)   in working out a * capital gain that an entity makes from CGT event E4 or G1 happening during any income year to some or all of those primary equity interests; or

  (c)   in working out whether a loss or gain is * realised for income tax purposes by a * realisation event that happens to some or all of those primary equity interests (in their character as * trading stock or * revenue assets).

Application of section to deemed dividend

  (5)   If a * corporate tax entity makes a * distribution that is not otherwise a distribution of income or capital, this section applies as if the distribution were a distribution of income or capital the entity made.

Note:   Subsection   (5) extends this section to cover something that is taken to be a dividend paid by a company. Compare item   1 of the table in subsection   960 - 120(1).

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