Private ruling: Section 45B of the Income Tax Assessment Act 1936
Published: May 2013
Ruling period: Year ended 31 December 2013.

Ruling: Q1: Will the Commissioner make a determination under paragraph 45B(3)(b) of the Income Tax Assessment Act 1936 (ITAA 1936) that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the capital benefit provided by Company A to its sole shareholder? | A1: No.

Relevant facts and circumstances: 1. Company A is an Australian resident which is a wholly-owned subsidiary of Company B, a non-resident. 2. Company B is ultimately owned by Company C (also a non-resident) whose ordinary shares are listed on the offshore stock exchange. 3. Company C's ordinary shares are regularly traded on the offshore stock exchange. 4. The membership interests in Company A do not pass the principal asset test in subsection 855-30(2) of the Income Tax Assessment Act 1997 (ITAA 1997). 5. Company A's shares are post-CGT shares. 6. Company A will return share capital to Company B. 7. Company A will pay dividends to Company B. 8. Company A has not made any previous return of capital to Company B. 9. Company A has paid some dividends to Company B. 10. Company A had a credit balance in its franking account. 11. Company B has no net capital losses.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 45B | Income Tax Assessment Act 1936 section 45C | Income Tax Assessment Act 1936 paragraph 177D(b)

Reasons for decision: Summary: The Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the capital benefit provided by Company A to its shareholder, Company B.