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INCOME TAX ASSESSMENT ACT 1997 - SECT 165.12

Company must maintain the same owners

Ownership test period

             (1)  In determining whether section 165-10 prevents a company from deducting a * tax loss, the ownership test period is the period from the start of the * loss year to the end of the income year.

Note:          See section 165- 255 for the rule about incomplete test periods.

Voting power

             (2)  There must be persons who had * more than 50% of the voting power in the company at all times during the * ownership test period.

Note 1:       See section 165-150 to work out who had more than 50% of the voting power.

Note 2:       Subdivision 167-B has special rules for working out voting power in a company whose shares do not all carry the same voting rights, or do not carry all of the voting rights in the company.

Rights to dividends

             (3)  There must be persons who had rights to * more than 50% of the company's dividends at all times during the * ownership test period.

Note 1:       See section 165- 155 to work out who had rights to more than 50% of the company's dividends.

Note 2:       Subdivision 167-A has special rules for working out rights to dividends in a company whose shares do not all carry the same rights to dividends.

Rights to capital distributions

             (4)  There must be persons who had rights to * more than 50% of the company's capital distributions at all times during the * ownership test period.

Note 1:       See section 165-160 to work out who had rights to more than 50% of the company's capital distributions.

Note 2:       Subdivision 167-A has special rules for working out rights to capital distributions in a company whose shares do not all carry the same rights to capital distributions.

When to apply the primary test

             (5)  To work out whether a condition in this section was satisfied at all times during the * ownership test period, apply the primary test for that condition unless subsection (6) requires the alternative test to be applied.

Note:          For the primary test, see subsections 165-150(1), 165-155(1) and 165-160(1).

When to apply the alternative test

             (6)  Apply the alternative test for that condition if one or more other companies beneficially owned * shares or interests in shares in the company at any time during the * ownership test period.

Note:          For the alternative test, see subsections 165-150(2), 165-155(2) and 165-160(2).

Conditions in subsections (2), (3) and (4) may be treated as having been satisfied in certain circumstances

             (7)  If any of the conditions in subsections (2), (3) and (4) have not been satisfied, those conditions are taken to have been satisfied if:

                     (a)  they would have been satisfied except for the operation of section 165-165; and

                     (b)  the company has information from which it would be reasonable to conclude that less than 50% of the * tax loss has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any * CGT event in relation to any * direct equity interests or * indirect equity interests in the company during the * ownership test period.

          (7A)  If the company is:

                     (a)  a * non-profit company; or

                     (b)  a * mutual affiliate company; or

                     (c)  a * mutual insurance company;

during the whole of the * ownership test period, the conditions in subsections (3) and (4) are taken to have been satisfied by the company.

Time of happening of CGT event

             (8)  The happening of a * CGT event in relation to a * direct equity interest or * indirect equity interest in the company that results in the failure of the company to satisfy a condition in subsection (2), (3) or (4) is taken, for the purposes of paragraph (7)(b), to have occurred during the * ownership test period.



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