INCOME TAX ASSESSMENT ACT 1936
LIABILITY TO TAXATION
Application of section
This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of capital benefits and the payment of dividends to its shareholders in such a way that:
(a) the capital benefits are, or apart from this section would be, received by shareholders (the
) who would, in the year of income in which the capital benefits are provided, derive a greater benefit from the capital benefits than other shareholders; and
(b) it is reasonable to assume that the other shareholders (the
) have received, or will receive, dividends.
However, it does not apply if section
applies in relation to the streaming or in the circumstances set out in subsection (5).
Commissioner to determine that section
The Commissioner may make, in writing, a determination that section
applies in relation to the whole, or a part, of the capital benefits. A determination does not form part of an assessment.
Subsection (6) limits the determination to a part of the capital benefit in certain cases.
provision of capital benefit
A reference to the
provision of a capital benefit
to a shareholder in a company is a reference to any of the following:
(a) the provision to the shareholder of shares in the company;
(c) something that is done in relation to a share that has the effect of increasing the value of a share (which may or may not be the same share) held by the shareholder.
S 45A(3) amended by No 58 of 2000.
For the purposes of this section, a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return.
S 45A(3A) inserted by No 163 of 2001.
from capital benefits
The circumstances in which a shareholder would, in a year of income, derive a
from capital benefits than another shareholder include, but are not limited to, any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder:
(a) some or all of the shares in the company held by the shareholder were acquired, or are taken to have been acquired, before 20 September 1985;
(b) the shareholder is a non-resident;
(c) the cost base (for the purposes of Part
) of the relevant share is not substantially less than the value of the applicable capital benefit;
(d) the shareholder has a net capital loss for the year of income in which this capital benefit is provided;
(e) the shareholder is a private company who would not have been entitled to a rebate under former section 46F if the shareholder had received the dividend that was paid to the disadvantaged shareholder;
| View history reference
(f) the shareholder has income tax losses.
S 45A(4) amended by
No 101 of 2006
, s 3 and Sch 2 item 208, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
Certain capital benefits not covered
This section does not apply where the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, fully franked dividends.
Determination limited in certain cases
If the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, partly franked dividends, the Commissioner may only make a determination under subsection (2) in relation to so much of the capital benefit as the Commissioner considers relates to the unfranked part of the dividend.
S 45A inserted by No 63 of 1998.