Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 170.265

  (1)   An entity is a connected entity of the originating company at a particular time if, at that time:

  (a)   the entity is a trustee of a trust and either:

  (i)   if the trust is a * fixed trust--one or more companies that are members of the * linked group of which the originating company is a member, or one or more of those companies and their * associates, between them have the right to receive for their own benefit (either directly, or indirectly through one or more interposed entities) more than 50% of any distribution to beneficiaries of the trust of income or corpus of the trust; or

  (ii)   if the trust is not a fixed trust--any company that is a member of the linked group of which the originating company is a member or any associate of such a company benefits or is capable of benefiting under the trust; or

  (b)   the entity is an individual who has a controlling stake in the company.

  (2)   For the purposes of paragraph   (1)(b), an individual has a controlling stake in a company at a particular time if the individual, or the individual and his or her * associates between them:

  (a)   are able at that time to exercise, or control the exercise of, more than 50% of the voting power in the company (either directly, or indirectly through one or more interposed entities); or

  (b)   have at that time the right to receive for their own benefit (either directly, or indirectly through one or more interposed entities) more than 50% of any dividends that the company may pay; or

  (c)   have at that time the right to receive for their own benefit (either directly, or indirectly through one or more interposed entities) more than 50% of any distribution of capital of the company.

Note:   Division   167 has special rules for working out rights to voting power, dividends and capital distributions in a company whose shares do not all carry the same rights to those matters.

  (3)   If:

  (a)   apart from this subsection, an interest that gives an entity and its * associates (if any):

  (i)   the ability to exercise, or control the exercise of, any of the voting power in a company; or

  (ii)   the right to receive dividends that a company may pay; or

  (iii)   the right to receive a distribution of capital of a company;

    would, in the application of paragraph   (2)(a), (b) or (c), be counted more than once; and

  (b)   the interest is both direct and indirect;

only the direct interest is to be counted.