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INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 1A - Circumstances in which a taxpayer can qualify for a franking credit, a franking rebate or the intercorporate dividend rebate  

Subdivision A - Preliminary  

SECTION 160APHH  OTHER SPECIAL PROVISIONS RELATING TO ACQUISITION OR DISPOSAL OF SHARES OR INTERESTS IN SHARES  

160APHH(1)  Shares or interests acquired or disposed of under a contract.  


If:


(a) a taxpayer acquires or disposes of shares, or an interest in shares, under a contract; and


(b) the price payable for the acquisition or disposal is fixed under the contract; and


(c) either of the following applies:


(i) the contract is unconditional;

(ii) the contract is subject to a condition being complied with before the contract takes effect and the condition has been complied with;

the taxpayer is taken, for the purposes of this Division, to have acquired or disposed of, as the case may be, the shares, or the interest, at the time of the making of the contract.

160APHH(2)  Bonus shares.  


If shares (the bonus shares) are issued to a taxpayer in respect of existing shares:


(a) if any part of the bonus shares is, or is taken to be, a dividend that is included in the taxpayer's assessable income - the bonus shares are taken for the purposes of this Division to have been acquired by the taxpayer at the time when they were issued; or


(b) otherwise - the bonus shares:


(i) are taken for the purposes of section 160APHR to have been acquired by the taxpayer at the time when they were issued; and

(ii) are taken for the purposes of the other provisions of this Division to have been acquired by the taxpayer at the time when the existing shares were acquired and to have been held by the taxpayer continuously from that time until they were issued.

In calculating the number of days for which the taxpayer is taken to have continuously held bonus shares as mentioned in subparagraph (b)(ii), any days before the bonus shares were issued in respect of which the taxpayer materially diminished risks of loss or opportunities for gain in respect of the existing shares are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer is taken to have held bonus shares.

160APHH(3)  Shares or interest distributed in satisfaction of interest.  


If:


(a) a taxpayer holds an interest in shares:


(i) under a trust; or

(ii) as a partner in a partnership; and


(b) the shares, or an interest in the shares, is distributed to the taxpayer in satisfaction of the interest referred to in paragraph (a);

the taxpayer is taken, for the purposes of this Division, to have held the shares or interest so distributed, to the extent to which the shares or interest distributed satisfies the interest referred to in paragraph (a), from the time when the taxpayer acquired the interest referred to in that paragraph.

In calculating the number of days for which the taxpayer is taken to have continuously held the shares or interest so distributed, any days in respect of which the trustee or partnership materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer is taken to have held the shares or interest.

160APHH(4)  Shares or interest passing to executor or administrator.  


If any shares or interest in shares held by a person who has died has passed to the executor of the will, or the administrator of the estate, of the dead person, the executor or administrator is taken, for the purposes of this Division, to have acquired the shares at the time when they were acquired by the dead person.

In calculating the number of days for which the executor or administrator is taken to have continuously held the shares or interest, any days in respect of which the person materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the executor or administrator is taken to have held the shares or interest.

160APHH(5)  Shares or interest held by person under a legal disability transferred to a trustee.  


If:


(a) a person who holds shares or an interest in shares becomes subject to a legal disability; and


(b) the shares or interest is transferred to a trustee to be held in trust for the person while the person is under a legal disability;

both the person and the trustee are taken, for the purposes of this Division, to have held the shares or interest for the periods in which the shares or interest was held by either of them.

In calculating the number of days for which the trustee is taken to have continuously held the shares or interest, any days in respect of which the person materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the trustee is taken to have held the shares or interest.

160APHH(6)  Shares held by a bare trustee for a sole beneficiary.  


If:


(a) a person (the trustee) holds shares in trust for another person (the beneficiary); and


(b) the beneficiary:


(i) is the sole beneficiary of the trust; and

(ii) is absolutely entitled under the trust to the shares;

the following provisions have effect:


(c) this Division applies as if:


(i) the shares were held by the beneficiary and not by the trustee; and

(ii) the acts of the trustee in relation to the shares were acts of the beneficiary;


(d) if the shares were acquired by the trustee as a result of a disposal by the beneficiary, that acquisition and disposal are to be disregarded;


(e) if the shares are subsequently acquired by the beneficiary as a result of a disposal by the trustee, that acquisition and disposal are to be disregarded.

160APHH(7)  What happens if paragraph (6)(b) ceases to apply to beneficiary.  


If paragraph (6)(b) ceases to apply to the beneficiary, then, after the time when it so ceases to apply (the relevant time):


(a) if the trust has become a widely held trust:


(i) the shares are taken to have been disposed of by the beneficiary to the trustee at the relevant time; and

(ii) the beneficiary is taken to have acquired the beneficiary's interest in the shares immediately after the disposal; or


(b) in any other case - this Division applies to the beneficiary and the trustee as if subsection (6) had never applied;

and the respective positions of the beneficiary and the trustee in relation to the shares or interest are to be determined accordingly.

160APHH(8)  Certain disposals to be disregarded.  


If:


(a) a taxpayer holds, or holds an interest in, shares; and


(b) the taxpayer disposes of the shares or interest; and


(c) the taxpayer is, under subsection 26BC(4), to be treated in the determination of the matters mentioned in paragraphs 26BC(4)(a) and (b) as if the transaction effecting the disposal had not been entered into;

the disposal is to be taken for the purposes of this Division not to have occurred.

160APHH(9)  Change of trustees not to affect continuity of holding of shares or interests.  


Any person who was a trustee of a trust during part only of a continuous period in which shares or an interest in shares formed part of the trust estate is taken, for the purposes of this Division, to have held the shares or interest throughout that period.

160APHH(10)  Certain disposals of shares or interests between companies in the same wholly-owned group not to affect continuity of holding.  


A company that is a member of a wholly-owned group is taken, for the purposes of this Division, to have held shares or an interest in shares throughout a continuous period if:


(a) the company held the shares or interest during part of the period; and


(b) during the remainder of the period the shares or interest was held by another company or other companies that were members of the same group.

In calculating the number of days in the continuous period during which the first-mentioned company is taken to have held the shares or interest, any days in the part of the period in which the shares or interest was held by a company that made an election in relation to the shares or interest under section 160APHR are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the first-mentioned company is taken to have held the shares or interest.


 



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