Private ruling: Same business test
Published: March 2013
Ruling period: 1 July 2012 to 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Will Company A's acquisition of Company B result in Company A satisfying the same business test in section 165-210 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: The Applicant applied for a Private Binding Ruling (the Application) on behalf of Company A. The Applicant advises that Company A proposes to acquire Company B. The Application seeks a ruling on the application of same business test in section 165-210 of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 165-A | Income Tax Assessment Act 1997 Subdivision 165-E | Income Tax Assessment Act 1997 Section 165-10 | Income Tax Assessment Act 1997 Section 165-12 | Income Tax Assessment Act 1997 Section 165-13 | Income Tax Assessment Act 1997 Section 165-210 | Income Tax Assessment Act 1997 Division 166 | Income Tax Assessment Act 1997 Section 166-5

Reasons for decision: Summary: Section 165-210 provides the required conditions that need to be met for the same business test to be satisfied: 165-210(1) A company satisfies the same business test if throughout the *same business test period it carries on the same *business as it carried on immediately before the *test time. 165-210(2) However, the company does not satisfy the *same business test if, at any time during the *same business test period, it *derives assessable income from: (a) a *business of a kind that it did not carry on before the *test time; or (b) a transaction of a kind that it had not entered into in the course of its business operations before the *test time. 165-210(3) The company also does not satisfy the *same business test if, before the *test time, it: (a) started to carry on a *business it had not previously carried on; or (b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into; and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the *same business test period the same business as it carried on immediately before the test time. As paragraph 33 of TR 1999/9 states, whether the same business is carried on is a question of fact: In Avondale Motors, Gibbs J said: 'The question whether a company has commenced a new business or has continued an old business under different conditions is simply one of fact.' Having regard to the relevant facts, it is considered that the actual business carried on by Company A at the test time is the same business carried on by Company A in the income year ending 30 June 2013. This is so notwithstanding the acquisition of Company A. Accordingly, Company A satisfies the same business test in subsection 165-210(1) of the ITAA 1997.

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