TAXATION LAWS AMENDMENT ACT (NO. 2) 2000 - SCHEDULE 10 Concessional tracing rules for company loss etc. provisions
TAXATION LAWS AMENDMENT ACT (NO. 2) 2000 - SCHEDULE 10
Concessional tracing rules for company loss etc. provisionsPart 1 -- Family trust tracing concession for company loss etc. provisions
Division 1--Amendment of the Income Tax Assessment Act 1936
1 Paragraph 50H(7)(a)
Repeal the paragraph, substitute:
(a) a person has a shareholding interest in a company if:
(i) the person is the beneficial owner of, or of an interest in, any shares in the company; or
(ii) the person is the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) who is the owner of, or of an interest in, any shares in the company; and
2 After subsection 50K(1)
Insert:
(1A) If the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) owns shares in a company, the trustee is taken to be the beneficial owner of the shares.
3 After section 50K
Insert:
50KA Special provision relating to capacity in which family trust beneficially owns shares
For the purposes of sections 50D and 50H, if:
(a) the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) is taken by subsection 50K(1A), or by that subsection and subsection 50J(6), to be the beneficial owner of shares; and
(b) the trustee is a company;
the trustee is taken to be a natural person.
4 After section 50N
Insert:
50P Information about family trusts with interests in company
Notice about family trust
(1) The Commissioner may give a company a notice in accordance with section 50Q if the requirements of subsections ( 2) to (5) of this section are met.
First requirement
(2) In its return of income for a year of income:
(a) the company must not have calculated its taxable income in accordance with section 50C; or
(b) the company must have calculated its taxable income in accordance with that section and in doing so must have taken into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company.
Second requirement
(3) The Commissioner must be satisfied that:
(a) if paragraph ( 2)(a) applies--the company was not required to calculate its taxable income in accordance with section 50C but it would have been if one or more trusts had not been family trusts (see subsection ( 6)); or
(b) if paragraph ( 2)(b) applies--the company was required to calculate its taxable income in accordance with section 50C and in doing so was entitled to take into account the amount by reason of subsection 50D(2), but it would not have been so entitled unless one or more trusts had been family trusts (see subsection ( 6)).
Third requirement
(4) When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non - resident; or
(b) the central management and control of the trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the year of income to which the return relates; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
Family trust
(6) The expression family trust has the same meaning as in section 272 - 75 of Schedule 2F.
50Q Notice where requirements of section 50P are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 50P(2) to (5) are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F) of, income and capital, since the start of the income year to which the return relates, by all of the family trusts meeting the requirements of paragraph 50P(4)(a) or (b).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows:
(a) if paragraph 50P(2)(a) applies--the company is required, and is taken always to have been required, to calculate its taxable income of the year of income in accordance with section 50C; or
(b) if paragraph 50P(2)(b) applies--the company is not entitled, and is taken never to have been entitled, to take into account the amount by reason of subsection 50D(2).
(5) If, because of paragraph ( 4)(a), the company is required to calculate its taxable income for the year of income in accordance with section 50C, that section is to be applied as if it required the year of income to be divided into such relevant periods as would result in the highest possible taxable income for the year of income.
No offences or penalties
(6) To avoid doubt, subsections ( 4) and (5) do not cause the company to commit any offence or be liable to any penalty under Part VII for not calculating its taxable income in accordance with section 50C, or for taking into account the amount by reason of subsection 50D(2), in the company's return.
5 Subsections 63A(2), (4) and (6)
Omit "and 63C", substitute ", 63C and 63CB".
6 After subsection 63A(6)
Insert:
(6A) For the purposes of subsection ( 2) or (4), if a family trust (within the meaning of section 272 - 75 of Schedule 2F) owns a share in a company, the trustee is taken to own the share beneficially.
7 Subsection 63A(8)
Omit "and 63C", substitute ", 63C and 63CB".
8 After subsection 63A(9)
Insert:
(9A) For the purposes of applying subsection ( 9) to the whole or a fraction of a dividend or of a distribution of capital that a person who is the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) would receive or would have received in the event of a payment as mentioned in that subsection, the requirement in that subsection that the person would do so or have done so otherwise than as a trustee is to be disregarded.
(9B) For the purpose of paragraph ( 4)(b) or (c) or (8)(b) or (c), if the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) has a right to receive, directly or (as a result of applying subsection ( 9) in accordance with subsection ( 9A)) indirectly, the whole or part of a dividend or of a distribution of capital, the trustee is taken:
(a) to have that right for his or her own benefit; and
(b) if the trustee is a company--not to be a company.
9 Paragraph 63B(5)(a)
Repeal the paragraph, substitute:
(a) a person has a shareholding interest in a company if:
(i) the person is the beneficial owner of, or of an interest in, any shares in the company; or
(ii) the person is the trustee of a family trust (within the meaning of section 272 - 75 of Schedule 2F) who is the owner of, or of an interest in, any shares in the company; and
10 After section 63C
Insert:
63CA Information about family trusts with interests in company
Notice about family trust
(1) The Commissioner may give a company a notice in accordance with section 63CB if the requirements of subsections ( 2) to (4) of this section are met.
First requirement
(2) In its return of income for a year of income, the company must have deducted an amount in respect of a debt incurred in the year of income or an earlier year of income, where it was allowed to do so but would not have been unless one or more trusts had been family trusts (see subsection ( 5)).
Second requirement
(3) When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non - resident; or
(b) the central management and control of the trust must be outside Australia.
Third requirement
(4) The Commissioner must give the notice before the later of:
(a) 5 years after the year of income to which the return relates; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
Family trust
(5) The expression family trust has the same meaning as in section 272 - 75 of Schedule 2F.
63CB Notice where requirements of section 63CA are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 63CA(2) to (4) are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F) of, income and capital, since:
(a) if the debt was incurred in an earlier year of income--the start of the day on which the debt was incurred; or
(b) if the debt was incurred in the year of income--the start of the year of income;
by all of the family trusts meeting the requirements of paragraph 63CA(3)(a) or (b).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is not entitled, and is taken never to have been entitled, to deduct the amount in respect of the debt.
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII for deducting the amount in respect of the debt in the company's return.
11 After section 160ZC
Insert:
160ZCA Information about family trusts with interests in companies: first case
Notice about company
(1) The Commissioner may give a company a notice in accordance with section 160ZCB if the requirements of this section are met.
Company must have applied a net capital loss in certain circumstances
(2) In determining in its return of income for the 1997 - 98 year of income whether a net capital gain accrued to the company, the company must have applied a net capital loss that is to be taken to have been incurred in the 1996 - 97 year of income where, under subsection 160ZC(5), it would not have been allowed to apply the loss if it did not meet the condition in section 165 - 12 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
Role of family trust
(3) The Commissioner must be satisfied that the company meets the conditions in section 165 - 12 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act, but it would not do so unless one or more trusts were family trusts (within the meaning of section 272 - 75 of Schedule 2F).
Non - resident trust
(4) When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non - resident; or
(b) the central management and control of the trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the 1997 - 98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
160ZCB Notice where requirements of section 160ZCA are met
Information required
(1) The notice that the Commissioner may give if the requirements of section 160ZCA are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F) of, income and capital, since the start of the 1996 - 97 year of income by all of the family trusts meeting the requirements of paragraph 160ZCA(4)(a) or (b).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is not entitled, and is taken never to have been entitled, to apply the net capital loss.
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII for applying the net capital loss in the company's return.
160ZCC Information about family trusts with interests in companies: second case
Notice about company
(1) The Commissioner may give a company a notice in accordance with section 160ZCD if the requirements of this section are met.
Net capital loss must have been applied in certain circumstances
(2) In determining whether a net capital gain accrued to the company for the 1997 - 98 year of income, a net capital loss that is to be taken to have been incurred in respect of the 1996 - 97 year of income must have been applied, where subsection 160ZC(5) would have prevented it from being applied but for the application of subsection 175 - 10(2) or 175 - 15(2) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
Role of family trust
(3) A family trust (within the meaning of section 272 - 75 of Schedule 2F) must have been:
(a) one of the continuing shareholders mentioned in subsection 175 - 10(2) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act; or
(b) the person who had the shareholding interest mentioned in subsection 175 - 15(2) of the Income Tax Assessment Act 1997 , as so applied;
as the case requires.
Non - resident trust
(4) When the Commissioner gives the notice:
(a) a trustee of the family trust must be a non - resident; or
(b) the central management and control of the family trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the 1997 - 98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
160ZCD Notice where requirements of section 160ZCC are met
Information required
(1) The notice that the Commissioner may give if the requirements of section 160ZCC are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F) of, income and capital by the family trust since the start of the 1996 - 97 year of income.
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the net capital loss cannot be applied.
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII for previously applying the net capital loss in the company's return.
Division 2--Amendment of the Income Tax Assessment Act 1997
12 After section 165 - 205
Insert:
165 - 207 Trustee of family trust treated as beneficial owner
(1) For the purposes of a primary test, the trustee of a * family trust who owns * shares in a company is taken to own the shares beneficially.
(2) For the purposes of an alternative test, the trustee of a * family trust who has the right to receive (whether directly, or indirectly through one or more interposed entities) a percentage of a * dividend or a distribution of capital is taken:
(a) to have the right to receive the percentage for the trustee's own benefit; and
(b) if the trustee is a company--not to be a company.
13 Subsection 166 - 165(1)
Repeal the subsection, substitute:
(1) The rules in these provisions also apply for the purposes of an ownership test in this Subdivision:
• section 165 - 175 (which is about how an ownership test can be satisfied by a single person);
• section 165 - 185 (which treats some shares as never having carried rights);
• section 165 - 190 (which treats some shares as always having carried rights);
• section 165 - 195 (which disregards redeemable shares);
• section 165 - 200 (which is about how other rules do not affect how shares or rights are counted);
• section 165 - 205 (which deals with deaths of beneficial owners);
• subsection 165 - 207(2) (which treats the trustee of a family trust as a beneficial owner of some rights).
14 Subsection 175 - 95(1)
Repeal the subsection, substitute:
(1) A person has a shareholding interest in the company if the person is:
(a) the beneficial owner; or
(b) the trustee of a * family trust who is the owner;
of:
(c) * shares in the company; or
(d) an interest in * shares in the company.
15 After Division 175
Insert:
Division 180 -- Information about family trusts with interests in companies
Table of Subdivisions
Guide to Division 180
180 - A Information relevant to Division 165
180 - B Information relevant to Division 175
180 - 1 What this Division is about
If a company would only avoid the tax consequences of Division 165 or 175 because of interests held by a non - resident family trust, the Commissioner may require the company to give certain information about the non - resident family trust. If it is not given, the company does not avoid the tax consequences of that Division.
Subdivision 180 - A -- Information relevant to Division 165
Table of sections
180 - 5 Information about family trusts with interests in companies
180 - 10 Notice where requirements of section 180 - 5 are met
180 - 5 Information about family trusts with interests in companies
Notice about company
(1) The Commissioner may give a company a notice in accordance with section 180 - 10 if the requirements of this section are met.
Tax detriment under Division 165
(2) In its return of income for an income year:
(a) the company must have deducted a * tax loss from a * loss year where it would not be allowed to deduct the tax loss if it did not meet the conditions in section 165 - 12; or
(b) the company must not have calculated:
(i) its taxable income and tax loss under Subdivision 165 - B; and
(ii) its * net capital gain and * net capital loss under Subdivision 165 - CB;
where it would have been required to calculate them under that Subdivision if it did not satisfy the requirements of paragraph 165 - 35(a); or
(c) the company must have applied a * net capital loss from an earlier income year in working out its net capital gain or * net capital loss where it would not have been allowed to apply the loss if it did not meet the condition in section 165 - 12 as applied on the assumption mentioned in subsection 165 - 96(1); or
(d) the company must have deducted a debt that it wrote off as bad in the income year where it would not be allowed to deduct the debt if it did not satisfy the requirements of paragraph 165 - 120(1)(a) or (b).
Role of family trust
(3) The Commissioner must be satisfied that the company:
(a) if paragraph ( 2)(a) applies--meets the conditions in section 165 - 12; or
(b) if paragraph ( 2)(b) applies--satisfies the requirements of paragraph 165 - 35(a); or
(c) if paragraph ( 2)(c) applies--meets the conditions in section 165 - 12 as applied on the assumption mentioned in subsection 165 - 96(1); or
(d) if paragraph ( 2)(d) applies--satisfies the requirements of paragraph 165 - 120(1)(a) or (b);
but it would not do so unless one or more trusts were * family trusts.
Non - resident trust
(4) When the Commissioner gives the notice, for at least one of the * family trusts:
(a) a trustee of the trust must be a non - resident; or
(b) the central management and control of the trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the income year to which the return relates; and
(b) the end of the period during which the company is required by section 262A of the Income Tax Assessment Act 1936 to retain records in relation to that income year.
180 - 10 Notice where requirements of section 180 - 5 are met
Information required
(1) The notice that the Commissioner may give if the requirements of section 180 - 5 are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F to the Income Tax Assessment Act 1936 ) of, income and capital, since the start of:
(a) if paragraph 180 - 5(2)(a) applies--the * loss year mentioned in that paragraph; or
(b) if paragraph 180 - 5(2)(b) applies--the income year for which that paragraph is being applied; or
(c) if paragraph 180 - 5(2)(c) applies--the earlier income year mentioned in that paragraph; or
(d) if paragraph 180 - 5(2)(d) applies:
(i) where the debt mentioned in that paragraph was incurred in an earlier income year--the day on which the debt was incurred; or
(ii) where the debt mentioned in that paragraph was incurred in the income year mentioned in that paragraph--that income year;
by all of the * family trusts meeting the requirements of paragraph 180 - 5(4)(a) or (b).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows:
(a) if paragraph 180 - 5(2)(a) applies--the company is not entitled, and is taken never to have been entitled, to deduct the * tax loss; or
(b) if paragraph 180 - 5(2)(b) applies--the company is required, and taken always to have been required:
(i) to calculate its taxable income and tax loss for the income year under Subdivision 165 - B; and
(ii) to calculate its * net capital gain and * net capital loss for the income year under Subdivision 165 - CB; or
(c) if paragraph 180 - 5(2)(c) applies--the company is not entitled, and is taken never to have been entitled, to apply the net capital loss; or
(d) if paragraph 180 - 5(2)(d) applies--the company is not entitled, and is taken never to have been entitled, to deduct the debt.
(5) If, because of paragraph ( 4)(b), the company is required to calculate under Subdivision 165 - B its taxable income and * tax loss for the income year concerned, that Subdivision is to be applied as if it required the income year to be divided into such periods as would result in the highest possible taxable income for the income year.
(6) If, because of paragraph ( 4)(b), the company is required to calculate under Subdivision 165 - CB its * net capital gain and * net capital loss for the income year concerned, that Subdivision is to be applied as if it required the income year to be divided into such periods as would result in the highest net capital gain for the income year.
No offences or penalties
(7) To avoid doubt, subsections ( 4) to (6) do not cause the company to commit any offence or be liable to any penalty under Part VII of the Income Tax Assessment Act 1936 for:
(a) deducting the * tax loss; or
(b) not calculating its taxable income and tax loss under Subdivision 165 - B as it applies in accordance with subsection ( 5) of this section; or
(c) not calculating its * net capital gain and * net capital loss under Subdivision 165 - CB as it applies in accordance with subsection ( 6) of this section; or
(d) applying the net capital loss; or
(e) deducting the debt;
in the company's return.
Subdivision 180 - B -- Information relevant to Division 175
Table of sections
180 - 15 Information about family trusts with interests in companies
180 - 20 Notice where requirements of section 180 - 15 are met
180 - 15 Information about family trusts with interests in companies
Notice about company
(1) The Commissioner may give a company a notice in accordance with section 180 - 20 if the requirements of this section are met.
Tax detriment under Division 175
(2) The Commissioner:
(a) must have been prevented by subsection 175 - 10(2) or 175 - 15(2) from disallowing, as a deduction for an income year, the whole or part of a * tax loss from a * loss year; or
(b) must have been prevented by subsection 175 - 20(2), 175 - 25(2) or 175 - 30(4) from disallowing the whole or part of a deduction for an income year; or
(c) must have been prevented by subsection 175 - 45(2) or 175 - 50(2) from disallowing, in working out the * net capital gain or * net capital loss for an income year, the whole or part of a * net capital loss for an earlier income year (or a part of one); or
(d) must have been prevented by subsection 175 - 60(2), 175 - 65(2) or 175 - 70(4) from disallowing, in working out its net capital gain or net capital loss for an income year, the whole or part of a * capital loss made during the income year; or
(e) must have been prevented by subsection 175 - 85(2) or 175 - 90(2) from disallowing, as a deduction for an income year, the whole or part of a debt.
Role of family trust
(3) A * family trust must have been:
(a) one of the * continuing shareholders mentioned in subsection 175 - 10(2), 175 - 20(2), 175 - 25(2), 175 - 45(2), 175 - 60(2), 175 - 65(2) or 175 - 85(2); or
(b) the person who had the * shareholding interest mentioned in subsection 175 - 15(2), 175 - 30(4), 175 - 50(2), 175 - 70(4) or 175 - 90(2);
as the case requires.
Non - resident trust
(4) When the Commissioner gives the notice:
(a) a trustee of the * family trust must be a non - resident; or
(b) the central management and control of the * family trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the income year mentioned in subsection ( 2); and
(b) the end of the period during which the company is required by section 262A of the Income Tax Assessment Act 1936 to retain records in relation to that income year.
180 - 20 Notice where requirements of section 180 - 15 are met
Information required
(1) The notice that the Commissioner may give if the requirements of section 180 - 15 are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272 - B of Schedule 2F to the Income Tax Assessment Act 1936 ) of, income and capital by the * family trust since the start of:
(a) the * loss year mentioned in paragraph 180 - 15(2)(a); or
(b) the income year mentioned in paragraph 180 - 15(2)(b) or (d); or
(c) the earlier income year mentioned in paragraph 180 - 15(2)(c); or
(d) if the debt mentioned in paragraph 180 - 15(2)(e) was incurred in the income year mentioned in that paragraph--that income year; or
(e) if the debt mentioned in paragraph 180 - 15(2)(e) was incurred in an earlier income year than the one mentioned in that paragraph--the day on which the debt was incurred.
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows:
(a) subsection 175 - 10(2), 175 - 15(2), 175 - 20(2), 175 - 25(2), 175 - 30(4), 175 - 85(2) or 175 - 90(2) does not prevent the Commissioner from disallowing the deduction; or
(b) subsection 175 - 45(2) or 175 - 50(2) does not prevent the Commissioner from * disallowing the * net capital loss; or
(c) subsection 175 - 60(2), 175 - 65(2) or 175 - 70(4) does not prevent the Commissioner from * disallowing the * capital loss;
as the case requires.
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII of the Income Tax Assessment Act 1936 for claiming the deduction, or applying the * net capital loss or * capital loss, in the company's return.
16 Subsection 995 - 1(1)
Insert:
"family trust" has the same meaning as in section 272 - 75 of Schedule 2F to the Income Tax Assessment Act 1936 .
Division 3--Application of amendments
17 Application
(1) The amendments made by items 1 to 4 apply in relation to the 1996 - 97 year of income.
(2) The amendments made by items 5 to 10 apply:
(a) to allowable deductions for the 1996 - 97 year of income for amounts in respect of debts incurred in that year of income; or
(b) to allowable deductions for the 1997 - 98 year of income for amounts in respect of debts incurred in that year of income or in the 1996 - 97 year of income.
(3) The amendments made by items 12 and 13 apply:
(a) so far as the amendments affect Subdivision 165 - A (including as modified by Subdivision 166 - A) of the Income Tax Assessment Act 1997-- where the loss year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year; and
(b) so far as the amendments affect Subdivision 165 - B (including as modified by Subdivision 166 - B) of the Income Tax Assessment Act 1997-- where the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year; and
(c) so far as the amendments affect Subdivision 165 - CA of the Income Tax Assessment Act 1997 --where the earlier income year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the current income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year; and
(d) so far as the amendments affect Subdivision 165 - CB (including as modified by Subdivision 166 - B) of the Income Tax Assessment Act 1997 --where the income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year; and
(e) so far as the amendments affect Subdivision 165 - C (including as modified by Subdivision 166 - C) of the Income Tax Assessment Act 1997 --where the debt mentioned in that Subdivision was incurred in the 1996 - 97 income year or any later income year and the current year mentioned in that Subdivision is the 1998 - 99 income year or any later income year.
(4) The amendments made by item 14 apply:
(a) so far as the amendments affect Subdivision 175 - A of the Income Tax Assessment Act 1997-- where the loss year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year; and
(b) so far as the amendments affect Subdivision 175 - B of the Income Tax Assessment Act 1997-- where the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year; and
(c) so far as the amendments affect Subdivision 175 - CA of the Income Tax Assessment Act 1997 --where the earlier income year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year; and
(d) so far as the amendments affect Subdivision 175 - CB of the Income Tax Assessment Act 1997-- where the income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year; and
(e) so far as the amendments affect Subdivision 175 - C of the Income Tax Assessment Act 1997 --where the debt mentioned in that Subdivision was incurred in the 1996 - 97 income year or any later income year and the income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year.
(5) Subdivision 180 - A of the Income Tax Assessment Act 1997 as inserted by item 15 of this Schedule applies where:
(a) the loss year mentioned in paragraph 180 - 5(2)(a) is the 1996 - 97 income year or any later income year and the income year for which that paragraph is being applied is the 1997 - 98 income year or any later income year; or
(b) the income year for which subparagraph 180 - 5(2)(b)(i) is being applied is the 1997 - 98 income year or any later income year; or
(c) the income year for which subparagraph 180 - 5(2)(b)(ii) is being applied is the 1998 - 99 income year or any later income year; or
(d) the earlier income year mentioned in paragraph 180 - 5(2)(c) is the 1996 - 97 income year or any later income year and the income year for which that paragraph is being applied is the 1998 - 99 income year or any later income year; or
(e) the debt mentioned in paragraph 180 - 5(2)(d) was incurred in the 1996 - 97 income year or any later income year and the income year mentioned in that paragraph is the 1998 - 99 income year or any later income year.
(6) Subdivision 180 - B of the Income Tax Assessment Act 1997 as inserted by item 15 of this Schedule applies where:
(a) the loss year mentioned in paragraph 180 - 15(2)(a) is the 1996 - 97 income year or any later income year and the income year mentioned in that paragraph is the 1997 - 98 income year or any later income year; or
(b) the income year mentioned in paragraph 180 - 15(2)(b) is the 1997 - 98 income year or any later income year; or
(c) the earlier income year mentioned in paragraph 180 - 15(2)(c) is the 1996 - 97 income year or any later income year and the income year mentioned in that paragraph is the 1998 - 99 income year or any later income year; or
(d) the income year mentioned in paragraph 180 - 15(2)(d) is the 1998 - 99 income year or any later income year; or
(e) the debt mentioned in paragraph 180 - 15(2)(e) was incurred in the 1996 - 97 income year or any later income year and the income year mentioned in that paragraph is the 1998 - 99 income year or any later income year.
Part 2 -- Trust loss amendments related to Part 1 amendments
Income Tax Assessment Act 1936
18 At the end of subsection 271 - 60(3) of Schedule 2F
Add:
; and (c) any company to which subsection ( 5) applies; and
(d) any person who is a director of such a company when the determination is made.
Note: The heading to subsection 271 - 60(3) of Schedule 2F is altered by omitting " paragraph ( 2)(b) " and substituting " subsection ( 2) ".
19 Subsection 271 - 60(4) of Schedule 2F
Omit "held an interest in relation to the trust as mentioned in subsection 272 - 30(2)", substitute "been a family trust".
20 At the end of section 271 - 60 of Schedule 2F
Add:
Company mentioned in paragraph ( 3)(c)
(5) This subsection applies to a company if, in its return of income for the income year in which the determination is made or an earlier income year:
(a) the company deducted an amount in respect of a debt, where it was allowed to do so but, because of section 63B or 63C, or Subdivision 165 - C of the Income Tax Assessment Act 1997 , it would not have been if the family trust had not been a family trust; or
(b) the company deducted a tax loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165 - A of that Act, it would not have been if the family trust had not been a family trust; or
(c) the company applied a net capital loss (within the meaning of Part IIIA of this Act) where it was allowed to do so but, because of subsection 160ZC(5), it would not have been if the family trust had not been a family trust; or
(d) the company applied a net capital loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165 - CA of that Act, it would not have been if the family trust had not been a family trust;
(e) the company did not calculate its taxable income in accordance with section 50C of this Act where it was not required to do so but would have been if the family trust had not been a family trust; or
(f) the company calculated its taxable income in accordance with section 50C and took into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company under section 50D, where it was required to calculate its taxable income in accordance with section 50C and entitled to take the amount into account but would not have been so entitled if the family trust had not been a family trust; or
(g) the company did not calculate its taxable income and tax loss under Subdivision 165 - B of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust; or
(h) the company did not calculate its net capital gain and net capital loss under Subdivision 165 - CB of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust.
21 Application
The amendments made by this Part apply to the making of determinations under section 271 - 60 of Schedule 2F to the Income Tax Assessment Act 1936 after the commencement of this Part, in relation to tax under section 271 - 15 of that Schedule that:
(a) has become due and payable before the commencement of this Part; or
(b) becomes due and payable after the commencement of this Part.
Part 3 -- Non - fixed trust tracing concession for company loss etc. provisions
Division 1--Amendment of the Income Tax Assessment Act 1936
22 Subsection 50H(1)
After "Subject to this section", insert "and section 50HA".
23 After subsection 50H(1)
Insert:
(1A) If:
(a) the taxable income of a company is required by subsection 50C(1) to be calculated in accordance with section 50C; and
(b) the company satisfies the requirements of subsections 50HA(2) and (4);
then:
(c) for the purpose of applying section 50C to calculate the taxable income, subsection ( 1) of this section applies as if paragraphs ( a), (b) and (c) were omitted and the paragraphs set out in subsection ( 1B) were substituted; and
(d) in the substituted paragraphs, the expressions control a non - fixed trust , directly or indirectly , excepted trust , fixed entitlement , group , more than a 50% stake and non - fixed trust have the same meanings as in Schedule 2F.
(1B) For the purposes of paragraph ( 1A)(c), the substituted paragraphs are as follows:
(a) immediately after the relevant time, the persons having fixed entitlements to shares of the income or shares of the capital of:
(i) if the company satisfied the requirements of paragraph 50HA(2)(a)--the company; or
(ii) if the company satisfied the requirements of paragraph 50HA(2)(b)--the holding entity mentioned in that paragraph;
or the percentages of those shares, were different from immediately before the relevant time;
(b) immediately after the relevant time, there were no individuals who had more than a 50% stake in either the income or capital of a non - fixed trust (other than an excepted trust) that held directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the year of income who, immediately before the relevant time, had more than a 50% stake in the income or capital, respectively, of the non - fixed trust;
(c) at the relevant time, a group began to control a non - fixed trust (other than an excepted trust) that held directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the year of income.
24 After section 50H
Insert:
(1) Paragraphs 50H(1)(a), (b) and (c) do not apply if the company satisfies the conditions in this section.
First condition
(2) At all times during the year of income:
(a) both:
(i) persons must have held fixed entitlements (see subsection ( 6)) to all of the income and capital of the company; and
(ii) non - fixed trusts (see subsection ( 6)), other than family trusts (see subsection ( 6)), must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust (see subsection ( 6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection ( 6)), fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(a) case--the company; or
(b) in a paragraph ( 2)(b) case--the holding entity;
at the beginning of the year of income must have held those entitlements to those shares at all times during the year of income.
Third condition
(4) At the beginning of the year of income:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust as defined in subsection ( 6)) that, at any time in the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 60 of Schedule 2F does not require the non - fixed trust to work out its net income and loss for the income year under Division 268 of Schedule 2F.
Meaning of expressions
(6) The expressions directly or indirectly , excepted trust , family trust , fixed entitlement , fixed trust and non - fixed trust have the same meanings as in Schedule 2F.
50HB Information about non - fixed trusts with interests in company
Notice about non - resident non - fixed trust
(1) The Commissioner may give the company a notice in accordance with section 50HC if the requirements of subsections ( 2) to (5) of this section are met.
First requirement
(2) In its return of income for the year of income, the company must not have calculated its taxable income and loss for the year of income under section 50C where it would be required to calculate its taxable income and loss under that section unless it met the conditions in section 50HA.
Second requirement
(3) In order to determine whether it meets the conditions in that section, the Commissioner must need information about a non - fixed trust mentioned in subsection 50HA(5).
Third requirement
(4) When the Commissioner gives the notice:
(a) a trustee of the non - fixed trust must be a non - resident; or
(b) the central management and control of the non - fixed trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
50HC Notices where requirements of section 50HB are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 50HB(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 50HA(5) are satisfied in relation to the non - fixed trust mentioned in subsections 50HB(3) and (4).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the conditions in section 50HA.
Application of section 50C
(5) If, because of subsection ( 4), the company is required to calculate its taxable income and loss for the year of income in accordance with section 50C, that section is to be applied as if it required the year of income to be divided into such relevant periods as would result in the highest possible taxable income for the year of income.
No offences or penalties
(6) To avoid doubt, subsections ( 4) and (5) do not cause the company to commit any offence or be liable to any penalty under Part VII for not calculating its taxable income and loss in accordance with section 50C in its return.
25 Subsection 63A(2)
Before "63B", insert "63AA,".
26 Subsection 63A(4)
Before "63B", insert "63AA,".
27 Subsection 63A(6)
Before "63B", insert "63AB,".
28 Subsection 63A(8)
Before "63B", insert "63AB,".
29 After section 63A
Insert:
(1) Section 63A does not prevent an amount in respect of a debt incurred in an earlier year of income being an allowable deduction in the year of income if the company satisfies the conditions in this section.
First condition
(2) At all times during:
(a) the part (the eligible earlier year period ) of the earlier year of income occurring after the beginning of the day on which the debt was incurred; and
(b) during the year of income;
either:
(c) non - fixed trusts (see subsection ( 6)), other than family trusts (see subsection ( 6)), must have held fixed entitlements (see subsection ( 6)) to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(d) both:
(i) a fixed trust (see subsection ( 6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection ( 6)), fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(c) case--the company; or
(b) in a paragraph ( 2)(d) case--the holding entity;
at the beginning of the eligible earlier year period must have held those entitlements to those shares at all times during the eligible earlier year period and the year of income.
Third condition
(4) At the beginning of the eligible earlier year period:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust as defined in subsection ( 6)) that, at any time in the eligible earlier year period or the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 25 of Schedule 2F would not have prevented the non - fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.
Meaning of expressions
(6) The expressions directly or indirectly , excepted trust , family trust , fixed entitlement , fixed trust and non - fixed trust have the same meanings as in Schedule 2F.
(1) Section 63A does not prevent an amount in respect of a debt incurred in the year of income being an allowable deduction if the company satisfies the conditions in this section.
First condition
(2) At all times during the year of income:
(a) both:
(i) persons must have held fixed entitlements (see subsection ( 6)) to all of the income and capital of the company; and
(ii) non - fixed trusts (see subsection ( 6)), other than family trusts (see subsection ( 6)), must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust (see subsection ( 6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection ( 6)), fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(a) case--the company; or
(b) in a paragraph ( 2)(b) case--the holding entity;
at the beginning of the year of income must have held those entitlements to those shares at all times during the year of income.
Third condition
(4) At the beginning of the year of income:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust as defined in subsection ( 6)) that, at any time in the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 65 of Schedule 2F would not have prevented the non - fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.
Meaning of expressions
(6) The expressions directly or indirectly , excepted trust , family trust , fixed entitlement , fixed trust and non - fixed trust have the same meanings as in Schedule 2F.
63AC Information about non - fixed trusts with interests in company
Notice about non - resident non - fixed trust
(1) The Commissioner may give the company a notice in accordance with section 63AD if the requirements of subsections ( 2) to (5) of this section are met.
First requirement
(2) In its return of income for the year of income, the company must have deducted an amount in respect of a debt where it would not be allowed to deduct the amount unless it met the conditions in section 63AA or 63AB.
Second requirement
(3) In order to determine whether it meets the conditions in that section, the Commissioner must need information about a non - fixed trust mentioned in subsection 63AA(5) or 63AB(5).
Third requirement
(4) When the Commissioner gives the notice:
(a) a trustee of the non - fixed trust must be a non - resident; or
(b) the central management and control of the non - fixed trust must be outside Australia.
Fourth requirement
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
63AD Notices where requirements of section 63AC are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 63AC(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 63AA(5) or 63AB(5) are satisfied in relation to the non - fixed trust mentioned in subsections 63AC(3) and (4).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the conditions in section 63AA or 63AB.
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII for deducting the amount in respect of the debt in its return.
30 Before section 160ZD
Insert:
160ZCE Information about non - fixed trusts with interests in company
Notice about non - resident non - fixed trust
(1) The Commissioner may give the company a notice in accordance with section 160ZCF if the requirements of subsections ( 2) to (5) of this section are met.
Company must have applied a net capital loss in certain circumstances
(2) In determining in its return of income for the 1997 - 98 year of income whether a net capital gain accrued to the company, the company must have applied a net capital loss that is to be taken to have been incurred in the 1996 - 97 year of income where, under subsection 160ZC(5), it would not have been allowed to apply the loss if it did not meet the condition in section 165 - 215 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
Information about non - fixed trust
(3) In order to determine whether it meets the condition, the Commissioner must need information about a non - fixed trust mentioned in subsection 165 - 215(5) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
Non - resident trust
(4) When the Commissioner gives the notice:
(a) a trustee of the non - fixed trust must be a non - resident; or
(b) the central management and control of the non - fixed trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the 1997 - 98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
160ZCF Notices where requirements of section 160ZCE are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 160ZCE(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 165 - 215(5) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act, are satisfied in relation to the non - fixed trust mentioned in subsections 160ZCE(3) and (4).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the condition mentioned in subsection 160ZCE(2).
No offences or penalties
(5) To avoid doubt, subsection ( 4) does not cause the company to commit any offence or be liable to any penalty under Part VII for applying the net capital loss in the company's return.
Division 2--Amendment of the Income Tax Assessment Act 1997
31 After paragraph 165 - 10(a)
Insert:
Note: See section 165 - 215 for a special alternative to these conditions.
32 After paragraph 165 - 35(a)
Insert:
Note: See section 165 - 220 for a special alternative to the condition in this paragraph.
33 At the end of section 165 - 45
Add:
Note: See section 165 - 225 for a special alternative to this section.
34 At the end of subsection 165 - 96(1)
Add:
Note 3: Subdivision 165 - F may affect the application of Subdivision 165 - A.
35 After paragraph 165 - 102(a)
Insert:
Note: Subdivision 165 - F may affect the application of Subdivision 165 - B.
36 After paragraph 165 - 120(1)(a)
Insert:
Note: See section 165 - 230 for a special alternative to the condition in this paragraph.
37 After Subdivision 165 - E
Insert:
Subdivision 165 - F -- Special provisions relating to ownership by non - fixed trusts
Table of sections
165 - 215 Special alternative to change of ownership test for Subdivision 165 - A
165 - 220 Special alternative to change of ownership test for Subdivision 165 - B
165 - 225 Special way of dividing the income year under Subdivision 165 - B
165 - 230 Special alternative to change of ownership test for Subdivision 165 - C
165 - 235 Information about non - fixed trusts with interests in company
165 - 240 Notices where requirements of section 165 - 235 are met
165 - 245 Meaning of expressions
165 - 215 Special alternative to change of ownership test for Subdivision 165 - A
(1) If a company does not meet the conditions in section 165 - 12, it is nevertheless taken to meet the conditions if it meets the conditions in this section.
First condition
(2) At all times during the * loss year and the income year:
(a) both:
(i) persons must have held fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(a) case--the company; or
(b) in a paragraph ( 2)(b) case--the holding entity;
at the beginning of the * loss year must have held those entitlements to those shares at all times during the loss year and the income year.
Third condition
(4) At the beginning of the * loss year:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust) that, at any time in the * loss year or the income year, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 20 of Schedule 2F to the Income Tax Assessment Act 1936 would not have prevented the non - fixed trust from deducting the * tax loss concerned if it, rather than the company, had incurred the tax loss.
165 - 220 Special alternative to change of ownership test for Subdivision 165 - B
(1) If the company does not meet the condition in paragraph 165 - 35(a), it is nevertheless taken to meet the condition if it meets the conditions in this section.
First condition
(2) At all times during the income year:
(a) both:
(i) persons must have held fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(a) case--the company; or
(b) in a paragraph ( 2)(b) case--the holding entity;
at the beginning of the income year must have held those entitlements to those shares at all times during the income year.
Third condition
(4) At the beginning of the income year:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust) that, at any time in the income year, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 60 of Schedule 2F to the Income Tax Assessment Act 1936 does not require the non - fixed trust to work out its net income and * tax loss for the income year under Division 268.
165 - 225 Special way of dividing the income year under Subdivision 165 - B
If:
(a) the company is required to calculate:
(i) its taxable income and * tax loss for the income year under Subdivision 165 - B; and
(ii) its * net capital gain and * net capital loss for the income year under Subdivision 165 - CB; and
(b) the company meets the requirements of subsections 165 - 220(2) and (4);
section 165 - 45 is replaced by the following section:
165 - 45 First, divide the income year into periods
(1) Divide the income year into periods as follows.
(2) The first period starts at the start of the income year. Each later period starts immediately after the end of the previous period.
(3) The last period ends at the end of the income year. Each period (except the last) ends at the earliest of:
(a) the latest time that would result in the persons holding fixed entitlements to shares of the income or shares of the capital of:
(i) if the company meets the requirements of paragraph 165 - 220(2)(a)--the company; or
(ii) if the company meets the requirements of paragraph 165 - 220(2)(b)--the holding entity mentioned in that paragraph;
and the percentages of the shares that they hold, remaining the same during the whole of the period; and
(b) the times that, for all of the non - fixed trusts, other than excepted trusts, holding directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the income year, are the latest times that would result in individuals having more than a 50% stake in their income or capital; and
(c) the earliest time in the period when a group begins to control a non - fixed trust, other than an excepted trust, that holds directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the income year.
165 - 230 Special alternative to change of ownership test for Subdivision 165 - C
(1) If a company does not meet the conditions in section 165 - 123, it is nevertheless taken to meet the conditions if it meets the conditions in this section.
First condition
(2) At all times during the * first continuity period and the * second continuity period (both within the meaning of subsection 165 - 120(2)):
(a) both:
(i) persons must have held fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust or a company (which trust or company is the holding entity ) must have held, directly or indirectly, fixed entitlements to all of the income and capital of the company; and
(ii) non - fixed trusts, other than * family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
Second condition
(3) The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph ( 2)(a) case--the company; or
(b) in a paragraph ( 2)(b) case--the holding entity;
at the beginning of the * first continuity period must have held those entitlements to those shares at all times during that period and the * second continuity period (within the meaning of subsection 165 - 120(2)).
Third condition
(4) At the beginning of the * first continuity period:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company.
Fourth condition
(5) It must be the case that, for each non - fixed trust (other than an excepted trust) that, at any time in the * first continuity period or the * second continuity period, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267 - 25 of Schedule 2F to the Income Tax Assessment Act 1936 would not have prevented the non - fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.
165 - 235 Information about non - fixed trusts with interests in company
Notice about non - resident non - fixed trust
(1) The Commissioner may give the company a notice in accordance with section 165 - 240 if the requirements of subsections ( 2) to (5) of this section are met.
Tax detriment under Division 165
(2) In its return of income for the income year:
(a) the company must have deducted a * tax loss from a * loss year where it would not be allowed to deduct the tax loss unless it met the conditions in section 165 - 215; or
(b) the company must not have calculated:
(i) its taxable income and tax loss for the income year under Subdivision 165 - B; and
(ii) its * net capital gain and * net capital loss for the income year under Subdivision 165 - CB;
where it would have been required to calculate them unless it met the conditions in section 165 - 220; or
(c) the company must have applied a net capital loss for an earlier income year in working out its net capital gain or net capital loss where it would not have been allowed to apply the loss unless it met the conditions in section 165 - 215 as applied on the assumption mentioned in subsection 165 - 96(1); or
(d) the company must have deducted a debt that it wrote off as bad in the income year where it would not be allowed to deduct the debt unless it met the conditions in section 165 - 230.
Information about non - fixed trust
(3) In order to determine whether it meets the conditions concerned, the Commissioner must need information about a non - fixed trust mentioned in:
(a) if paragraph ( 2)(a) applies--subsection 165 - 215(5); or
(b) if paragraph ( 2)(b) applies--subsection 165 - 220(5); or
(c) if paragraph ( 2)(c) applies--subsection 165 - 215(5) as applied on the assumption mentioned in subsection 165 - 96(1); or
(d) if paragraph ( 2)(d) applies--subsection 165 - 230(5).
Non - resident trust
(4) When the Commissioner gives the notice:
(a) a trustee of the non - fixed trust must be a non - resident; or
(b) the central management and control of the non - fixed trust must be outside Australia.
When notice must be given
(5) The Commissioner must give the notice before the later of:
(a) 5 years after the income year; and
(b) the end of the period during which the company is required by section 262A of the Income Tax Assessment Act 1936 to retain records in relation to that income year.
165 - 240 Notices where requirements of section 165 - 235 are met
Information required
(1) The notice that the Commissioner may give if the requirements of subsections 165 - 235(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether:
(a) if paragraph 165 - 235(2)(a) applies--the requirements of subsection 165 - 215(5); or
(b) if paragraph 165 - 235(2)(b) applies--the requirements of subsection 165 - 220(5); or
(c) if paragraph 165 - 235(2)(c) applies--the requirements of subsection 165 - 215(5) as applied on the assumption mentioned in subsection 165 - 96(1); or
(d) if paragraph 165 - 235(2)(d) applies--the requirements of subsection 165 - 230(5);
are satisfied in relation to the non - fixed trust mentioned in subsections 165 - 235(3) and (4).
Company knowledge
(2) The information need not be within the knowledge of the company at the time the notice is given.
Period for giving information
(3) The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
Consequence of not giving the information
(4) If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the conditions mentioned in whichever paragraph of subsection 165 - 235(2) is applicable.
Application of Subdivision 165 - B
(5) If, because of subsection ( 4), the company is required to calculate under Subdivision 165 - B its taxable income and * tax loss for the income year concerned, that Subdivision is to be applied as if it required the income year to be divided into such periods as would result in the highest possible taxable income for the income year.
Application of Subdivision 165 - CB
(6) If, because of subsection ( 4), the company is required to calculate under Subdivision 165 - CB its * net capital gain and * net capital loss for the income year concerned, that Subdivision is to be applied as if it required the income year to be divided into such periods as would result in the highest net capital gain for the income year.
No offences or penalties
(7) To avoid doubt, subsections ( 4) to (6) do not cause the company to commit any offence or be liable to any penalty under Part VII of the Income Tax Assessment Act 1936 for:
(a) deducting the * tax loss mentioned in paragraph 165 - 235(2)(a); or
(b) not calculating its taxable income and tax loss under Subdivision 165 - B as it applies in accordance with subsection ( 5) of this section; or
(c) not calculating its * net capital gain and * net capital loss under Subdivision 165 - CB as it applies in accordance with subsection ( 6) of this section; or
(d) applying the * net capital loss mentioned in paragraph 165 - 235(2)(c); or
(e) deducting the debt mentioned in paragraph 165 - 235(2)(d);
in the company's return.
165 - 245 Meaning of expressions
The expressions control a non - fixed trust , directly or indirectly , excepted trust , family trust , fixed entitlement , fixed trust , group , more than a 50% stake and non - fixed trust have the same meanings as in Schedule 2F to the Income Tax Assessment Act 1936 .
Division 3--Application of amendments
38 Application
(1) The amendments made by items 22 to 24 apply for the 1996 - 97 year of income.
(2) The amendments made by items 25 to 29 apply:
(a) to allowable deductions for the 1996 - 97 year of income for amounts in respect of debts incurred in that year of income; or
(b) to allowable deductions for the 1997 - 98 year of income for amounts in respect of debts incurred in that year of income or in the 1996 - 97 year of income.
(3) The amendments made by items 31 and 37 (so far as the amendments made by those items affect Subdivision 165 - A of the Income Tax Assessment Act 1997 ) apply where the loss year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year.
(4) The amendments made by items 32, 33 and 37 (so far as the amendments made by those items affect Subdivision 165 - B of the Income Tax Assessment Act 1997 ) apply where the income year mentioned in that Subdivision is the 1997 - 98 income year or any later income year.
(5) The amendments made by items 31, 32, 33, 34, 35 and 37 (so far as the amendments made by those items affect Subdivision 165 - CA of the Income Tax Assessment Act 1997 ) apply where the earlier income year mentioned in that Subdivision is the 1996 - 97 income year or any later income year and the current year mentioned in that Subdivision is the 1998 - 99 income year or any later income year.
(6) The amendments made by items 31, 32, 33, 34, 35 and 37 (so far as the amendments made by those items affect Subdivision 165 - CB of the Income Tax Assessment Act 1997 ) apply where the income year mentioned in that Subdivision is the 1998 - 99 income year or any later income year.
(7) The amendments made by items 36 and 37 (so far as the amendments made by those items affect Subdivision 165 - C of the Income Tax Assessment Act 1997 ) apply where the debt mentioned in that Subdivision was incurred in the 1996 - 97 income year or any later income year and the current year mentioned in that Subdivision is the 1998 - 99 income year or any later income year.