Commonwealth Consolidated Acts Commonwealth Consolidated ActsApplication
(1) This section modifies how the ownership tests in section 166 - 145 are applied to a * voting stake, a * dividend stake or a * capital stake in the tested company held by one of the following entities (the stakeholder ):
(a) a top interposed entity mentioned in section 166 - 230 (which is about indirect stakes of less than 10%);
(b) a * widely held company mentioned in section 166 - 240;
(c) an entity mentioned in subsection 166 - 245(2) (which is about stakes held by other entities);
(d) a * depository entity mentioned in section 166 - 260;
(whether directly, or * indirectly through one or more interposed entities).
Exactly the same shares or interests must continue to be held
(2) For the purpose of determining whether the tested company has satisfied a condition or whether a time is a changeover time or an alteration time in respect of the tested company:
(a) a condition that has to be satisfied is not satisfied; or
(b) a time that, apart from this subsection, would not be a changeover time or alteration time is taken to be a changeover time or alteration time, as the case may be;
unless, at all relevant times:
(c) the only * shares in the tested company that are taken into account are exactly the same shares and are held by the same persons; and
(d) the only interests (including shares) in any other entity that is interposed between the stakeholder and the tested company that are taken into account are exactly the same interests and are held by the same persons.
What happens in case of share splitting
(3) If:
(a) a particular * share (an old share ) in a company of which the stakeholder, or an entity interposed between the stakeholder and the tested company, is the holder at the start of the * test period is divided into 2 or more new shares during that period; and
(b) the stakeholder or entity becomes the holder of each of the new shares immediately after the division takes place and remains the holder until the end of that period;
the new shares are taken to be exactly the same shares as the old share.
What happens in case of splitting of units in a unit trust
(4) If:
(a) a particular unit (an old unit ) in a unit trust of which the stakeholder, or an entity interposed between the stakeholder and the tested company, is the holder at the start of the * test period is divided into 2 or more new units during that period; and
(b) the stakeholder or entity becomes the holder of each of the new units immediately after the division takes place and remains the holder until the end of that period;
the new units are taken to be exactly the same units as the old unit.
What happens in case of consolidation of shares
(5) If:
(a) a particular * share (an old share ) in a company of which the stakeholder, or an entity interposed between the stakeholder and the tested company, is the holder at the start of the * test period, and other shares (each of which is also called an old share ) in the company of which the stakeholder or entity is the holder at the start of that period, are consolidated into a new share during that period; and
(b) the stakeholder or entity becomes the holder of the new share immediately after the consolidation takes place;
the new share is taken to be exactly the same share as the old shares.
What happens in case of consolidation of units in a unit trust
(6) If:
(a) a particular unit (an old unit ) in a unit trust of which the stakeholder, or an entity interposed between the stakeholder and the tested company, is the holder at the start of the * test period and other units (each of which is also called an old unit ) in the trust of which the stakeholder or entity is the holder at the start of that period are consolidated into a new unit during that period; and
(b) the stakeholder or entity becomes the holder of the new unit immediately after the consolidation takes place;
the new unit is taken to be exactly the same unit as the old units.
Totals of shares or rights not affected
(7) This section does not affect how * shares, and rights carried by shares, are counted for the purpose of determining:
(a) the total voting power in the tested company; or
(b) the total dividends that the tested company may pay; or
(c) the total distributions of capital of the tested company.
Conditions in section 166 - 145 may be treated as having been satisfied in certain circumstances
(8) If any of the conditions in section 166 - 145 have not been satisfied, those conditions are taken to have been satisfied if:
(a) they would have been satisfied except for the operation of subsection (2) of this section; and
(b) the tested company has information from which it would be reasonable to conclude that less than 50% of:
(i) the * tax loss; or
(ii) the * notional loss; or
(iii) the bad debt; or
(iv) the unrealised net loss (within the meaning of section 165 - 115E);
as the case requires, 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 held in the tested company by the stakeholder, or an entity interposed between the stakeholder and the tested company, during the * test period.
Subsection (8) not to apply for purpose of determining whether an alteration time has occurred
(9) However, subsection (8) does not apply in relation to any of the conditions in section 166 - 145 in so far as those conditions have effect for the purpose of determining whether an alteration time (within the meaning of section 165 - 115L) has occurred.
Time of happening of CGT event
(10) The happening of any * CGT event in relation to a * direct equity interest or * indirect equity interest in the tested company that results in the failure of the tested company to satisfy a condition in section 166 - 145 is taken, for the purposes of paragraph (8)(b), to have occurred during the * test period.