Income Tax Assessment Act 1936

s 102AE — Eligible assessable income

(1) For the purposes of this Division, the eligible assessable income of a year of income of a person is so much of the assessable income of the person of the year of income as is not excepted assessable income. (2) Subject to this section, an amount included in the assessable income of a person (in this subsection referred to as the minor ) is excepted assessable income to the extent to which the amount: (a) is employment income or business income; (b) is derived by the minor from the investment of any property transferred to the minor: (i) by way of, or in satisfaction of a claim for, damages in respect of: (A) loss by the minor of parental support; or (B) personal injury to the minor, any disease suffered by the minor or any impairment of the minor’s physical or mental condition; (ii) pursuant to any law relating to worker’s compensation; (iii) pursuant to any law relating to the payment of compensation in respect of criminal injuries; (iv) directly as the result of the death of another person and under the terms of a life assurance policy; (v) directly as the result of the death of another person and out of a provident, benefit, superannuation or retirement fund; (vi) directly as the result of the death of another person by an employer of the deceased person; (vii) out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances; or (viii) as the result of a family breakdown (see section 102AGA); (c) is derived by the minor from the investment of any property: (i) that devolved upon the minor from the estate of a deceased person; (ii) that was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred within 3 years after the date of the death of the deceased person; or (iii) that was acquired by the minor as the beneficial owner of a verifiable prize in a legally authorized and conducted lottery; (d) not being business income, is included in the assessable income of the minor under section 92; (e) is included in the assessable income of the minor under section 97 or 100; or (f) is derived by the minor from the investment of any property that, in the opinion of the Commissioner, represents accumulations of: (i) excepted assessable income derived by the minor during a year of income in relation to which this Division applies; (ii) assessable income derived by the minor during a year of income in relation to which this Division does not apply, being assessable income that would, in the opinion of the Commissioner, have been excepted assessable income if this Division were applicable in relation to the year of income during which the assessable income was derived; or (iii) exempt income derived by the minor to which subparagraph (i) or (ii) would, in the opinion of the Commissioner, apply if that exempt income had been assessable income. (3) A reference in paragraph (2)(d) to an amount (not being business income) that is included in the assessable income of a person under section 92 in respect of the individual interest of the person in the net income of a partnership shall be read as a reference to so much of an amount so included in that assessable income as, in the opinion of the Commissioner, is attributable to so much of the assessable income of the partnership as would, in the opinion of the Commissioner, have been excepted assessable income if the assessable income of the partnership had been derived by that person. (4) A reference in paragraph (2)(e) to an amount included in the assessable income of a person under section 97 or 100 shall be read as not including a reference to any part to which this Division applies of an amount included in that assessable income under either of those sections. (5) Subject to subsections (6) and (7), a reference in paragraph (2)(a), in relation to a person (in this subsection referred to as the minor ), to business income shall, in relation to any business income derived by the minor during a year of income from the carrying on of a business, be read as a reference to: (a) in a case where during the year of income, the business was carried on by the minor either alone or in partnership with another person who was, or other persons each of whom was, under the age of 18 years on the first day of the year of income—so much of that business income as the Commissioner considers fair and reasonable having regard to: (i) the extent to which, during the year of income, the minor had the real and effective conduct and control of the business and participated in the operations and activities of the business; (ii) the extent to which the minor had the real and effective control over the disposal of income derived by the minor from the business during the year of income; (iii) the extent to which the capital of the business consisted of property contributed by the minor, being property the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor; and (iv) such other matters (if any) as the Commissioner thinks fit; and (b) in any other case—the amount that, in the opinion of the Commissioner, is reasonable remuneration by way of salary or wages for any services rendered by the minor during the year of income in the production of assessable income of the business increased by such amount (if any) as, in the opinion of the Commissioner, is reasonable, having regard to the extent to which the capital of the business consisted of property contributed by the minor the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor. (6) Subject to subsection (7), if any 2 or more parties to: (a) the derivation of the excepted assessable income mentioned in subsection (2); or (b) any act or transaction directly or indirectly connected with the derivation of that excepted assessable income; were not dealing with each other at arm’s length in relation to the derivation, or in relation to the act or transaction, the excepted assessable income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm’s length in relation to the derivation, or in relation to the act or transaction. (7) Subsection (2) does not apply in relation to assessable income derived by a person directly or indirectly under or as a result of an agreement that was entered into or carried out by any person (whether before or after the commencement of this subsection) for the purpose, or for purposes that included the purpose, of securing that that assessable income would not be eligible assessable income. (8) In determining whether subsection (7) applies in relation to an agreement, no regard shall be had to a purpose that is a merely incidental purpose. (9) Where: (a) any assessable income is derived by a person from the investment of any property transferred to the person by way of, or in satisfaction of a claim for, damages in respect of: (i) loss by the person of parental support; or (ii) personal injury to the person, any disease suffered by the person or any impairment of the person’s physical or mental condition; and (b) that property was transferred to that person otherwise than in pursuance of an order of a court; paragraph (2)(b) applies only to so much (if any) of that assessable income as the Commissioner considers fair and reasonable. (10) Where: (a) the assessable income of a person (in this subsection referred to as the minor ) of a year of income: (i) includes an amount derived by the minor from property that: (A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; and (B) was so transferred within 3 years after the date of the death of the deceased person; but does not include any amount that: (C) was derived by the minor from property that devolved upon the minor from the estate of that deceased person; or (D) is included in the assessable income of the minor under section 97 or 100 in respect of the share of the minor of the net income of a trust estate that resulted from a will or codicil of that deceased person, an order of a court that varied or modified the provisions of a will or codicil of that deceased person, a partial intestacy of that deceased person or an order of a court that varied or modified the application, in relation to the estate of that deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; or (ii) includes an amount derived by the minor from property that: (A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; and (B) was so transferred within 3 years after the date of death of the deceased person; and also includes an amount or amounts to which sub ‑ subparagraph (i)(C) or (D) applies; and (b) the amount to which subparagraph (a)(i) applies or the sum of the amounts to which subparagraph (a)(ii) applies, as the case may be, exceeds the amount that, in the opinion of the Commissioner, would have been included in the assessable income of the minor of the year of income in respect of an amount or amounts derived by the minor from property that, in the opinion of the Commissioner, would have devolved upon or for the benefit of the minor from the estate of that deceased person if that deceased person had died intestate; the amount of the assessable income of the minor of the year of income that would, apart from this subsection, have been excepted assessable income by virtue of subparagraph (2)(c)(ii) shall be reduced by the amount of that excess.

Amendment history: Inserted by No 19 of 1980, effective 30 Apr 1980 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 181 of 1994, Sch 1 item 16, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 108–115, 126(7)), Sch 2 (items 1, 3, 4, 35, 37), Sch 3 (items 1–3, 6, 7), Sch 9, Sch 10 (item 43(1)) and Sch 11: 25 June 2004 (s 2(1) items 1, 12, 13, 16, 17, 21, 27, 28) Sch 1 (item 1): 30 June 2000 (s 2(1) item 2) Sch 10 (items 1, 2): 1 July 2000 (s 2(1) item 22)

s 102AF — Employment income and business income

(1) A reference in this Division to employment income is to be read as a reference to: (a) work and income support related withholding payments and benefits; and (b) payments made for services rendered or to be rendered; and (c) compensation, sickness or accident payments: (i) made to an individual because of the individual’s or another’s incapacity for work; and (ii) calculated at a periodical rate. (3) In this Division, a reference, in relation to a person in relation to a year of income, to business income shall be read as a reference to income derived by the person during the year of income from carrying on of a business either alone or together with another person or other persons.

Amendment history: Inserted by No 19 of 1980, effective 30 Apr 1980 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 29 of 1982, effective s 3–24: 17 May 1982 (s 2(1)) | Amended by No 179 of 1999, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 101 of 2006, Sch 2 item 287, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 102AG — Trust income to which Division applies

(1) Where a beneficiary of a trust estate is a prescribed person in relation to a year of income, this Division applies to so much of the share of the beneficiary of the net income of the trust estate of the year of income as, in the opinion of the Commissioner, is attributable to assessable income of the trust estate that is not, in relation to that beneficiary, excepted trust income. (2) Subject to this section, an amount included in the assessable income of a trust estate is excepted trust income in relation to a beneficiary of the trust estate to the extent to which the amount: (a) is assessable income, of a kind covered by subsection (2AA), of a trust estate that resulted from: (i) a will, codicil or an order of a court that varied or modified the provisions of a will or codicil; or (ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; (b) is employment income; (c) is derived by the trustee of the trust estate from the investment of any property transferred to the trustee for the benefit of the beneficiary: (i) by way of, or in satisfaction of a claim for, damages in respect of: (A) loss by the beneficiary of parental support; or (B) personal injury to the beneficiary, any disease suffered by the beneficiary or any impairment of the beneficiary’s physical or mental condition; (ii) pursuant to any law relating to worker’s compensation; (iii) pursuant to any law relating to the payment of compensation in respect of criminal injuries; (iv) directly as the result of the death of a person and under the terms of a policy of life insurance; (v) directly as the result of the death of a person and out of a provident, benefit, superannuation or retirement fund; (vi) directly as the result of the death of a person by an employer of the deceased person; (vii) out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances; or (viii) as the result of a family breakdown (see section 102AGA); (d) is derived by the trustee of the trust estate from the investment of any property: (i) that devolved for the benefit of the beneficiary from the estate of a deceased person; (ii) that was transferred to the trustee for the benefit of the beneficiary by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred within 3 years after the date of the death of the deceased person; or (iii) being a verifiable prize in a legally authorized and conducted lottery and being a prize of which the beneficiary is the beneficial owner; or (e) is derived by the trustee of the trust estate from the investment of any property that, in the opinion of the Commissioner, represents accumulations of: (i) assessable income derived by the trustee during a year of income in relation to which this Division applies, being assessable income that, in relation to the beneficiary, is excepted trust income; (ii) assessable income derived by the trustee during a year of income in relation to which this Division does not apply, being assessable income that would, in the opinion of the Commissioner, have been excepted trust income in relation to the beneficiary if this Division were applicable in relation to the year of income during which the assessable income was derived; or (iii) exempt income derived by the trustee to which subparagraph (i) or (ii) would, in the opinion of the Commissioner, apply if that exempt income had been assessable income. (2AA) For the purposes of paragraph (2)(a), assessable income of a trust estate is of a kind covered by this subsection if: (a) the assessable income is derived by the trustee of the trust estate from property; and (b) the property satisfies any of the following requirements: (i) the property was transferred to the trustee of the trust estate to benefit the beneficiary from the estate of the deceased person concerned, as a result of the will, codicil, intestacy or order of a court mentioned in paragraph (2)(a); (ii) the property represents accumulations of income or capital from property that satisfies the requirement in subparagraph (i); (iii) the property represents accumulations of income or capital from property that satisfies the requirement in subparagraph (ii), or (because of a previous operation of this subparagraph) the requirement in this subparagraph. (2A) Paragraph (2)(c) or subparagraph (2)(d)(ii) does not apply unless the beneficiary of the trust concerned will, under the terms of the trust, acquire the trust property (other than as a trustee) when the trust ends. (3) Subject to subsection (4), if any 2 or more parties to: (a) the derivation of the excepted trust income mentioned in subsection (2); or (b) any act or transaction directly or indirectly connected with the derivation of that excepted trust income; were not dealing with each other at arm’s length in relation to the derivation, or in relation to the act or transaction, the excepted trust income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm’s length in relation to the derivation, or in relation to the act or transaction. (4) Subsection (2) does not apply in relation to assessable income derived by a trustee directly or indirectly under or as a result of an agreement that was entered into or carried out by any person (whether before or after the commencement of this subsection) for the purpose, or for purposes that included the purpose, of securing that that assessable income would be excepted trust income. (5) In determining whether subsection (4) applies in relation to an agreement, no regard shall be had to a purpose that is a merely incidental purpose. (5A) In the application of paragraph 102AF(1)(b) for the purposes of the application of paragraph (2)(b) of this section in relation to a beneficiary of a trust estate, payments made for services rendered or to be rendered shall not be taken to be employment income unless the services are rendered or to be rendered by the beneficiary. (6) Where: (a) any assessable income is derived by a trustee of a trust estate from the investment of any property transferred to the trustee for the benefit of a beneficiary of the trust estate by way of, or in satisfaction of a claim for, damages in respect of: (i) loss by the beneficiary of parental support; or (ii) personal injury to the beneficiary, any disease suffered by the beneficiary or any impairment of the beneficiary’s physical or mental condition; and (b) that property was transferred to the trustee otherwise than in pursuance of an order of a court; paragraph (2)(c) applies only to so much (if any) of that assessable income as the Commissioner considers fair and reasonable. (7) Where: (a) any assessable income is derived by a trustee of a trust estate from the investment of any property transferred to the trustee for the benefit of a beneficiary of the trust estate by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred to the trustee within 3 years after the date of death of the deceased person; and (b) the amount referred to in paragraph (a) or, if the assessable income of that beneficiary of the year of income includes any amount that: (i) was derived by the beneficiary from property that was transferred to the beneficiary by another person out of property that devolved upon that other person from the estate of that deceased person and was so transferred within 3 years after the date of death of that deceased person; (ii) was derived by the beneficiary from property that devolved upon the beneficiary from the estate of that deceased person; or (iii) is included in that assessable income under section 97 or 100 in respect of the share of that beneficiary of the net income of another trust estate, being a trust estate that resulted from a will or codicil of that deceased person, an order of a court that varied or modified the provisions of a will or codicil of that deceased person, a partial intestacy of that deceased person or an order of a court that varied or modified the application, in relation to the estate of that deceased person, of the provisions of the law relating to the distribution of estates of persons who die intestate; the sum of the amount referred to in paragraph (a) and the amount or amounts applicable by virtue of subparagraphs (i), (ii) and (iii) of this paragraph, exceeds the amount that, in the opinion of the Commissioner, would have been included in the assessable income of the beneficiary of the year of income in respect of an amount or amounts derived by the beneficiary from property that, in the opinion of the Commissioner, would have devolved directly upon that beneficiary if that deceased person had died intestate; the amount of the assessable income of the trust estate that would, apart from this subsection, have been excepted trust income in relation to that beneficiary by virtue of subparagraph (2)(d)(ii) shall be reduced by the amount of that excess. (8) For the purposes of this section, where: (a) any property is transferred to the trustee of a trust estate; and (b) the trustee has a discretion to pay or apply the income derived from that property to or for the benefit of specified beneficiaries or beneficiaries included in a specified class of beneficiaries; that property shall be taken to have been transferred to the trustee for the benefit of each of those specified beneficiaries or for each of the beneficiaries in that specified class of beneficiaries, as the case may be.

Amendment history: Inserted by No 19 of 1980, effective 30 Apr 1980 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 29 of 1982, effective s 3–24: 17 May 1982 (s 2(1)) | Amended by No 181 of 1994, Sch 1 item 18 | Sch 1 item 19 | Sch 1 item 20, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 64 of 2020, Sch 1 item 1 | Sch 1 item 2, effective Sch 1: 1 July 2020 (s 2(1) item 2) Sch 3 (items 203–227, 325, 326): 1 Oct 2020 (s 2(1) item 6)

s 102AGA — Transfer of property as the result of a family breakdown

(1) For the purposes of subparagraph 102AE(2)(b)(viii) or 102AG(2)(c)(viii), the transfer of property (the subject property ) by a person (the transferor ): (a) to the minor mentioned in subparagraph 102AE(2)(b)(viii); or (b) to the trustee mentioned in subparagraph 102AG(2)(c)(viii) for the benefit of the beneficiary mentioned in that subparagraph; is as the result of a family breakdown if the requirements of subsection (2) or (3) of this section are met. (2) The transfer will be as the result of a family breakdown if: (a) a person ceases to live with another person as the spouse of that person; and (b) at least one of the persons: (i) is the parent; or (iv) has legal custody or guardianship; of the minor or the beneficiary; and (c) an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the person has ceased to live as the spouse of the other person; and (d) the effect of the order, determination or assessment is that a person (whether one of the spouses, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the spouses; and (e) the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way). (3) The transfer will also be as a result of a family breakdown if: (a) when the minor or beneficiary is born, his or her parents are not living together as spouses; and (b) an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the parents are not living together as mentioned in paragraph (a); and (c) the effect of the order, determination or assessment is that a person (whether one of the parents, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the parents of the minor or beneficiary; and (d) the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way).

Amendment history: Inserted by No 181 of 1994, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 144 of 2008, Sch 14 item 21 | Sch 14 item 24 | Sch 14 item 25 | Sch 14 item 26 | Sch 14 item 27 | Sch 14 item 28, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36)

s 102A — Interpretation

(1) In this Division: associate , in relation to a person, means any person who is an associate, within the meaning of section 318, in relation to the person. interest , in relation to property, means any legal or equitable estate or interest in the property. property means any property whether real or personal. right to receive income from property means a right to have income that will or may be derived from property paid to, or applied or accumulated for the benefit of, the person owning the right. the prescribed date , in relation to a person who transfers to another person a right to receive income from property, means the day preceding the seventh anniversary of the date on which income from the property is first paid to, or applied or accumulated for the benefit of, the other person by reason of the transfer. (2) A reference in this Division to a transfer of an interest in property or of a right to receive income from property shall be read as a reference to any such transfer, whether made for valuable consideration or not. (3) For the purposes of this Division, any income that will or may be derived by a trust estate from a business carried on by the trustee of the trust estate shall be deemed to be income that will or may be derived from property. (4) For the purposes of this Division: (a) where a person: (i) declares that he or she holds a right to receive income from property upon trust for another person; or (ii) transfers such a right to a trustee to be held upon trust for another person; the right shall be deemed to be transferred to that other person; and (b) where a person: (i) declares that he or she holds a right to receive income from property upon trust for 2 or more other persons in succession; or (ii) transfers such a right to, or to a trustee to be held upon trust for, 2 or more other persons in succession; the right shall be deemed to be separately transferred to each of those other persons for the respective periods for which the right is held upon trust for, or transferred to, those persons. (5) Where an interest in property or a right to receive income from property is transferred by 2 or more persons jointly, each of those persons shall, for the purposes of this Division, be deemed to have transferred an interest in that property or a right to receive income from that property, as the case may be. (6) In this Division, unless the contrary intention appears: (a) a reference to the arm’s length consideration in respect of a transfer of a right to receive income from property is a reference to the consideration that might reasonably be expected to have been received or receivable in respect of the transfer if the right had been transferred under an agreement between independent parties dealing at arm’s length with each other in relation to the agreement and transfer; and (b) a reference to the amount of consideration is, in a case where consideration is paid or given otherwise than in cash, a reference to the money value of the consideration.

Amendment history: Inserted by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 46 of 1986, item 13 | item 1986, effective s 4–26: 24 June 1986 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 288, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 102B — Certain income transferred for short periods to be included in assessable income of transferor

(1) Subject to this section, where a right to receive income from property is transferred, otherwise than by a will or codicil, by a person (in this subsection referred to as the transferor ) to an associate of the transferor for a period that will, or may for any reason other than the death of any person or the associate becoming under a legal disability, terminate before the prescribed date, any income that: (a) is derived from the property; (b) is paid to, or applied or accumulated for the benefit of: (i) the associate; or (ii) any other associate of the transferor to whom a right to receive income from the property has been transferred (whether by the first ‑ mentioned associate or any other person) after the first ‑ mentioned transfer; and (c) would, if the first ‑ mentioned transfer had not been made, have been included in the assessable income of the transferor; shall be treated for the purposes of this Act as if the first ‑ mentioned transfer had not been made. (2) Subsection (1) (other than subparagraph (1)(b)(ii)) does not apply in relation to a transfer of a right to receive income from property where: (a) the right was not a right that arose from the ownership by the transferor of an interest in the property; (b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first ‑ mentioned transfer, the transferor transferred that interest to the transferee or another person; or (c) consideration has been received or is receivable in respect of the transfer and the amount of that consideration is not less than the arm’s length consideration in respect of the transfer. (3) Where, on a particular day, a person who has transferred to another person a right to receive income from property: (a) in any case—transfers to the other person or to a third person an interest in the property, being the interest from the ownership of which by the transferor the right arose; (b) in the case of a natural person—dies; or (c) in the case of a company—ceases to exist; subsection (1) (other than subparagraph (1)(b)(ii)) does not apply, in relation to the transfer of the right to receive income, in relation to income that is derived from the property after that day. (4) Subsection (1) does not apply in relation to income derived by a person in pursuance of a transfer to that person of a right to receive income from property where, by reason of subsection 51 ‑ 50(3) of the Income Tax Assessment Act 1997 , the income so derived by the person is not exempt from tax under section 51 ‑ 30 of that Act. (4A) Where: (a) subsection (1) (other than subparagraph (1)(b)(ii)) applies in relation to a transfer by a person of a right to receive income from property; and (b) consideration has been received or is receivable in respect of the transfer; then, notwithstanding any other provision of this Act (other than a provision of Part IVA), the amount of the consideration shall not be included in the assessable income of the person of a year of income. (5) Nothing in any other provision of this Act prevents the amendment of an assessment at any time for the purpose of excluding from the assessable income of a person income that is, by virtue of subsection (1), to be included in the assessable income of another person. (6) Where there is excluded from the assessable income of a person an amount that, in pursuance of subsection (1) was previously treated as assessable income of that person, nothing in any other provision of this Act prevents the amendment of any assessment at any time to give effect to the inclusion in the assessable income of another person of an amount that, in pursuance of that subsection, was treated as not being so included for the purposes of the assessment.

Amendment history: Inserted by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 46 of 1986, item 14 | item 15, effective s 4–26: 24 June 1986 (s 2(1)) | Amended by No 121 of 1997, Sch 3 item 41 | Sch 3 item 42, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5))

s 102C — Effect of certain transfers of rights to receive income from property

Where: (a) any income is paid to, or applied or accumulated for the benefit of, a person (in this section referred to as the transferee ) by reason of the transfer to the person of a right to receive income from property; and (b) the income so paid, applied or accumulated is, by virtue of section 102B, to be included in the assessable income of another person (in this section referred to as the transferor ); then: (c) for the purposes of the application of this Act other than this Division in relation to the transferor, an amount equal to the income so paid, applied or accumulated: (i) shall be deemed to have been paid by the transferor to the transferee at the time at which the income was paid to, or applied or accumulated for the benefit of, the transferee; and (ii) shall be deemed to have been so paid for the purpose for which the right was transferred; and (d) where, if the right had not been transferred, but the transferor had paid to the transferee, at the time at which the income was so paid to, or applied or accumulated for the benefit of, the transferee and for the purpose for which the right was transferred, an amount (in this paragraph referred to as the notional amount ) equal to the amount of the income so paid, applied or accumulated, the notional amount or a part of the notional amount would have been included in the assessable income of the transferee—there shall be included in that assessable income an amount equal to the notional amount or that part of the notional amount, as the case may be.

Amendment history: Inserted by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2)

s 102CA — Consideration in respect of transfer to be included in assessable income of transferor in certain cases

(1) Subject to this section, where: (a) a right to receive income from property is transferred, otherwise than by a will or codicil, by a person to another person; (b) consideration has been received or is receivable in respect of the transfer; and (c) immediately after the transfer, subsection 102B(1) (other than subparagraph 102B(1)(b)(ii)) does not apply in relation to the transfer; the assessable income of the transferor of the year of income in which the right is transferred shall include the amount of the consideration. (2) Subsection (1) does not apply in relation to a transfer of a right to receive income from property where: (a) the right was not a right that arose from the ownership by the transferor of an interest in the property; or (b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first ‑ mentioned transfer, the transferor transferred that interest to the transferee; or (c) the right is, or is part of, a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997 ). (3) Where, by reason of subsection 51 ‑ 50(3) of the Income Tax Assessment Act 1997 , income derived by a person pursuant to a transfer to the person of a right to receive income from property is not exempt from tax under section 51 ‑ 30 of that Act, subsection (1) does not apply in relation to the transfer.

Amendment history: Inserted by No 46 of 1986, effective s 4–26: 24 June 1986 (s 2(1)) | Amended by No 121 of 1997, Sch 3 item 43 | Sch 3 item 44, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 15 of 2009, Sch 1 item 35, effective Sch 1 (items 31–51, 102–105): 26 Mar 2009 (s 2(1) item 2)

s 102M — Interpretation

In this Division, unless the contrary intention appears: arrangement has the same meaning as in the Income Tax Assessment Act 1997 . eligible investment business means one or more of: (a) investing in land for the purpose, or primarily for the purpose, of deriving rent; or (b) investing or trading in any or all of the following: (i) secured or unsecured loans (including deposits with a bank or other financial institution); (ii) bonds, debentures, stock or other securities; (iii) shares in a company, including shares in a foreign hybrid company (as defined in the Income Tax Assessment Act 1997 ); (iv) units in a unit trust; (v) futures contracts; (vi) forward contracts; (vii) interest rate swap contracts; (viii) currency swap contracts; (ix) forward exchange rate contracts; (x) forward interest rate contracts; (xi) life assurance policies; (xii) a right or option in respect of such a loan, security, share, unit, contract or policy; (xiii) any similar financial instruments; or (c) investing or trading in financial instruments (not covered by paragraph (b)) that arise under financial arrangements, other than arrangements excepted by section 102MA. excluded rent means rent worked out by reference to the profits or receipts of an entity that uses any of the relevant land under an arrangement that is designed to result in the transfer of all, or substantially all, of what would otherwise be the profits of the entity to another party to the arrangement. financial arrangement has the same meaning as in the Income Tax Assessment Act 1997 . land includes an interest in land and fixtures on land. net income , in relation to a public trading trust, means the total assessable income of the trust calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions. A public trading trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F. prescribed trust estate means a trust estate that is, or has been, a public trading trust in relation to any year of income. property includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property. relevant year of income means the year of income that commenced on 1 July 1985 or a subsequent year of income. trading business means a business that does not consist wholly of eligible investment business. unit , in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate. unitholder , in relation to a prescribed trust estate, means the holder of a unit or units in the prescribed trust estate. unit trust dividend means: (a) any distribution made by the trustee of a prescribed trust estate, whether in money or in other property, to a unitholder; and (b) any amount credited by the trustee of a prescribed trust estate to a unitholder as a unitholder; but does not include: (c) money paid or credited, or property distributed, by the trustee of a prescribed trust estate to the extent to which the money or property is attributable to profits arising during a year of income in relation to which the prescribed trust estate was not a public trading trust; or (d) money paid or credited, or property distributed, by the trustee of a prescribed trust estate in respect of the cancellation, extinguishment or redemption of a unit to the extent to which: (i) the money paid or credited or the property distributed represents money paid to, or property transferred to, the trustee for the purpose of the creation or issue of that unit; and (ii) the amount of the money paid or credited or the value of the property distributed, as the case may be, does not exceed the amount of the money paid to the trustee, or the value, at the time of transfer, of the property transferred to the trustee, for the purpose of the creation or issue of that unit.

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 138 of 1987, Sch 2 item 22, effective s 4, 5 and 7–52: 18 Dec 1987 (s 2(1)) s 6: 21 Dec 1987 (s 2(2)) | Amended by No 78 of 1988, item 18, effective s 8–13, 14(1), 16–36, 38, 55(1)–(14), 56, 57 and Sch: 24 June 1988 (s 2(1)) s 14(2): 1 July 1988 (s 2(2)) s 15: 22 Dec 1986 (s 2(3)) s 37, 39–53 and 55(15)–(25):1 Nov 1988 (s 2(4) and gaz 1988, No S331) | Amended by No 95 of 1988, item 47, effective s 12–43, 44(b), 45–52, 54–58 and Sch: 24 Nov 1988 (s 2(1)) s 44(a) and 54(11): 16 Mar 1989 (s 2(2)) | Amended by No 153 of 1988, item 14, effective s 9–42 and 44: 26 Dec 1988 (s 2(1)) s 43: 1 Jan 1989 (s 2(2)) | Amended by No 97 of 1989, Sch 1 item 1989, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2) | Amended by No 105 of 1989, item 12, effective s 4, 5(a)–(n), (p) and 6–66: 30 June 1989 (s 2(1)) s 5(o): 18 Dec 1987 (s 2(2)) | Amended by No 56 of 1994, item 57, effective s 14–23, 39–54, 65–69, 70(3), 71(3), (4), 72–74, 75(2), 76–82, 83(3) and 84–87: 7 Apr 1994 (s 2(1)) s 24–32: 1 July 1993 (s 2(2)) s 33–38: 20 Mar 1994 (s 2(3)) s 55–64: 1 July 1994 (s 2(4)) s 70(1) and 83(1): 30 June 1989 (s 2(5), (8)) s 70(2), 71(2) and 83(2): 8 Jan 1991 (s 2(9)) s 71(1) and 75(1): 17 Jan 1990 (s 2(6), (7)) | Amended by No 169 of 1995, Sch 1 item 8, effective Sch 1 (items 1–14, 16), Sch 2 (items 1–8, 11–15), Sch 3 (items 1–36, 40–44) and Sch 8 (items 1–5): 16 Dec 1995 (s 2(1)) Sch 3 (items 37–39): 1 July 1994 (s 2(2)) Sch 10 (item 2): 13 Oct 1994 (s 2(5)) | Amended by No 121 of 1997, Sch 3 item 45 | Sch 3 item 46 | Sch 3 item 47, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 150 of 1997, Sch 2 item 5, effective Sch 2 (items 3–7): 17 Oct 1997 (s 2(1)) | Amended by No 17 of 1998, Sch 2F item 7, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 41 of 1998, Sch 6 item 3, effective s 4, Sch 1 (items 4–16, 18–26), Sch 2 (items 1–4), Sch 3 (items 1–3, 7(1)), Sch 4 (items 4, 5), Sch 5 (items 16, 18) and Sch 6 (items 1, 2, 4, 5, 7–13, 15–18, 27): 4 June 1998 (s 2(1)) Sch 1 (item 17): 9 Apr 1999 (s 2(2)) Sch 5 (items 17, 19): 12 Dec 1995 (s 2(5)) Sch 6 (item 3): 16 Dec 1985 (s 2(6)) Sch 6 (item 6): 1 Jan 1993 (s 2(7)) Sch 6 (item 14): never commenced (s 2(9)) Sch 6 (item 16): 1 July 1998 (s 2(10)) | Amended by No 44 of 1999, Sch 4 item 63, effective Sch 7 (items 59–104): 1 July 1999 (s 3(2)(e)) Sch 8 (items 18, 22, 23): 17 June 1999 (s 2(1)) | Amended by No 101 of 2004, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 63 of 2005, Sch 1 item 1, effective Sch 1 (items 1–4, 23), Sch 2 and Sch 5: 26 June 2005 (s 2(1) items 2, 4) | Amended by No 15 of 2007, Sch 1 item 89, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 45 of 2008, Sch 4 item 3, effective Sch 1 (items 2–7), Sch 4 (items 1–7) and Sch 7 (items 1–5): 26 June 2008 (s 2) | Amended by No 145 of 2008, Sch 5 item 1 | Sch 5 item 2 | Sch 5 item 3 | Sch 5 item 4 | Sch 5 item 5 | Sch 5 item 6 | Sch 5 item 7 | Sch 5 item 8, effective Sch 3 and 5: 9 Dec 2008 (s 2) | Amended by No 75 of 2010, Sch 5 item 2 | Sch 5 item 3 | Sch 5 item 4 | Sch 5 item 5, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7) | Amended by No 41 of 2011, Sch 5 item 378, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 102MA — Arrangements not covered

(1) For the purposes of paragraph (c) of the definition of eligible investment business in section 102M, the excepted arrangements are those specified in this section. Note: This section does not affect an arrangement that satisfies paragraph (a) or (b) of that definition. Leasing or property arrangement (2) A right or obligation arising under: (b) an arrangement to which Division 240 of the Income Tax Assessment Act 1997 (about arrangements treated as a sale and loan) applies; or (ba) an arrangement to which Division 242 (about leases of luxury cars) of the Income Tax Assessment Act 1997 applies; or (c) a financial arrangement in the form of a loan that is taken to exist by subsection 250 ‑ 155(1) of the Income Tax Assessment Act 1997 ; or (d) an arrangement that, in substance or effect, depends on the use of a specific asset that is: (i) real property; or (ii) goods or a personal chattel (other than money or a money equivalent); or (iii) intellectual property; and gives a right to control the use of the asset; or (e) an arrangement that is a licence to use: (i) real property; or (ii) goods or a personal chattel (other than money or a money equivalent); or (iii) intellectual property. Interest in partnership or trust estate (3) A right carried by an interest in a partnership or a trust estate, or an obligation that corresponds to such a right, if: (a) there is only one class of interest in the partnership or trust estate; or (b) the interest is an equity interest in the partnership or trust estate; or (c) for a right or obligation relating to a trust estate—the trust estate is managed by a funds manager or custodian, or a responsible entity (as defined in the Corporations Act 2001 ) of a registered scheme (as so defined). General insurance policies (4) A right or obligation under a general insurance policy. Guarantees and indemnities (5) A right or obligation under a guarantee or indemnity unless: (a) the financial arrangement is one where: (i) its value changes in response to changes in a specified variable or variables (such as an interest rate, foreign exchange rate, credit rating, index or commodity or financial instrument price); and (ii) there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors; or (b) the guarantee or indemnity is given or entered into in relation to a financial arrangement. Superannuation and pension income (6) A right to receive, or an obligation to provide, a financial benefit (as defined in the Income Tax Assessment Act 1997 ) if the right or obligation arises from a person’s membership of a superannuation or pension scheme. Retirement village arrangements (7) A right or obligation arising under: (a) a contract that gives rise to a right to occupy residential premises in a retirement village (as defined in the A New Tax System (Goods and Services Tax) Act 1999 ); or (b) a contract under which a resident of such a retirement village is provided with general or personal services in the retirement village.

Amendment history: Inserted by No 145 of 2008, Sch 5 item 4, effective Sch 3 and 5: 9 Dec 2008 (s 2) | Amended by No 12 of 2012, Sch 6 item 1 | Sch 6 item 2, effective s 4 and Sch 6 (items 1, 2, 188, 189, 219–234, 248, 252–255): 21 Mar 2012 (s 2(1) items 1, 6, 31) Sch 6 (items 30, 31): 15 Mar 2007 (s 2(1) item 12) Sch 6 (items 153–156): 22 Mar 2012 (s 2(1) item 26)

s 102MB — Investing in land

Moveable property (1) For the purposes of this Division, investments in moveable property, being property that is: (a) incidental to and relevant to the renting of land; and (b) customarily supplied or provided in connection with the renting of land; and (c) ancillary to the ownership and use of land; are taken to be investments in land. Safe harbour rule (2) For the purposes of this Division, an entity’s investments in land are taken to be for the purpose, or primarily for the purpose, of deriving rent during a year of income if: (a) each of those investments is for purposes (other than the purpose of trading) that include a purpose of deriving rent; and (b) at least 75% of the gross revenue from those investments for the year of income consists of rent (except excluded rent); and (c) none of the remaining gross revenue from those investments for the year of income is: (i) excluded rent; or (ii) from the carrying on of a business that is not incidental and relevant to the renting of the land. (3) In working out the gross revenue referred to in paragraph (2)(b), payments for the provision of services that: (a) are incidental to and relevant to the renting of land; and (b) are ancillary to the ownership and use of the land; are taken to be rent derived from the land. Example: Payments as reimbursement for expenses incurred by the lessor in providing security services for a shopping centre would be covered by this subsection. (4) In working out the gross revenue referred to in subsection (2), disregard any capital gains and capital losses from a CGT event arising from a disposal or other realisation of ownership of land. Meaning of entity (5) In this section: entity has the same meaning as in the Income Tax Assessment Act 1997 .

s 102MC — When trading business not carried on

A trustee of a unit trust that would, apart from this section, carry on a trading business at a time during a year of income is taken for the purposes of this Division not to carry on a trading business at a time during that year if, for that year, not more than 2% of the gross revenue of the trustee (as trustee of the unit trust) was income from things other than eligible investment business (except from the carrying on of a business that is not incidental and relevant to the eligible investment business).

s 102MD — Exempt institution that is eligible for a refund not treated as exempt entity

For the purposes of this Division, treat an entity as not being an exempt entity if: (a) the entity is an exempt institution that is eligible for a refund (within the meaning of the Income Tax Assessment Act 1997 ); or (b) the entity is treated as such an exempt institution that is eligible for a refund. Example: The Future Fund Board is treated as an exempt institution that is eligible for a refund for the purposes of the Income Tax Assessment Act 1997 (see section 84B of the Future Fund Act 2006 ).

Amendment history: Inserted by No 75 of 2010, Sch 5 item 9, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7) | Amended by No 70 of 2015, effective Sch 1 (items 47–64, 195–205): 1 July 2015 (s 2(1) items 3, 6) Sch 2 (items 1–16, 18–23, 38), Sch 3 and Sch 7 (items 2, 3, 11): 25 June 2015 (s 2(1) items 7, 20) | Repealed and substituted by No 53 of 2016, Sch 5 item 1, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 102N — Trading trusts

(1) For the purposes of this Division, a unit trust is a trading trust in relation to a year of income if, at any time during the year of income, the trustee: (a) carried on a trading business; or (b) controlled, or was able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business. (2) Despite paragraph (1)(b), a unit trust is not a trading trust only because it has acquired ownership interests (including a controlling interest) in, or controls: (a) a foreign entity whose business, when considered together with the businesses of entities that the foreign entity controls or is able to control, directly or indirectly, consists primarily of investing in land outside Australia for the purpose, or primarily for the purpose, of deriving rent; or (b) a foreign entity controlled, or able to be controlled, directly or indirectly, by an entity covered by paragraph (a). (3) In this section: entity has the same meaning as in the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 164 of 2007, Sch 8 item 2 | Sch 8 item 3 | Sch 8 item 4 | Sch 8 item 5, effective s 4, Sch 1 (items 27–35, 71), Sch 8 (items 1–5, 13(1)), Sch 10 (items 2–6) and Sch 11 (items 1–48, 78–80): 25 Sept 2007 (s 2(1) items 1, 2, 5, 8) Sch 10 (items 26–56): 1 July 2010 (s 2(1) item 6) Sch 12 (items 66–71): 27 Sept 2007 (s 2(1) item 9)

s 102NA — Certain interposed trusts not trading trusts

(1) A unit trust is not a trading trust for the purposes of this Division in relation to a year of income if: (a) the trust is an interposed trust in relation to a scheme for reorganising the affairs of stapled entities referred to in Subdivision 124 ‑ Q of the Income Tax Assessment Act 1997 in relation to the year of income or an earlier year of income; and (b) a roll ‑ over was obtained by any entity under that Subdivision of that Act in relation to the scheme for the year of income or that earlier year of income; and (c) the condition in subsection (2) is satisfied. (2) The trustee of the trust must not, at any time during the year of income: (a) carry on a trading business; or (b) control, or be able to control, directly or indirectly, the affairs or operations of another entity that carries on a trading business, other than: (i) a company that was, before the scheme was completed, one of the stapled entities referred to in Subdivision 124 ‑ Q of the Income Tax Assessment Act 1997 ; or (ii) a subsidiary of one of those stapled entities that is a company, or an entity that is controlled or able to be controlled, directly or indirectly, by that company; or (iii) a trust whose trustee was, before the scheme was completed, assessed and liable to pay tax under this Division (or under former Division 6B, before its repeal by the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 and that was, before the scheme was completed, one of those stapled entities; or (iv) an entity that is controlled or able to be controlled, directly or indirectly, by the trust referred to in subparagraph (iii); in relation to the year of income or an earlier year of income. (3) In this section: entity has the same meaning as in the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 164 of 2007, effective s 4, Sch 1 (items 27–35, 71), Sch 8 (items 1–5, 13(1)), Sch 10 (items 2–6) and Sch 11 (items 1–48, 78–80): 25 Sept 2007 (s 2(1) items 1, 2, 5, 8) Sch 10 (items 26–56): 1 July 2010 (s 2(1) item 6) Sch 12 (items 66–71): 27 Sept 2007 (s 2(1) item 9) | Amended by No 53 of 2016, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 102P — Public unit trusts

(1) For the purposes of this Division, but subject to the succeeding provisions of this section, a unit trust is a public unit trust in relation to a year of income if, at any time during the year of income: (a) any of the units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; (b) any of the units in the unit trust were offered to the public; or (c) the units in the unit trust were held by not fewer than 50 persons. (2) For the purposes of this Division, but subject to the succeeding provisions of this section, a unit trust is also a public unit trust in relation to a year of income if: (a) at any time during the year of income, an exempt entity or exempt entities held, or had the right to acquire or become the holder or holders of, a unit or units in the unit trust that entitled the holder or holders to not less than 20% of: (i) the beneficial interests in the income of the unit trust; or (ii) the beneficial interests in the property of the unit trust; (b) not less than 20% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders was paid or credited to an exempt entity or exempt entities; or (c) by reason of: (i) any provision in the instrument by which the trust was created, or any contract agreement or instrument authorising the variation or abrogation of the rights attaching to any of the units in the unit trust or relating to the conversion, cancellation, extinguishment or redemption of any such units; (ii) any contract, agreement, option or instrument under which a person has power to acquire a unit or units in the unit trust; or (iii) any power, authority or discretion in a person in relation to the rights attaching to any of the units in the unit trust; the rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (iv) units in the unit trust that entitled the holder or holders to not less than 20% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust; would have been held by an exempt entity or exempt entities; (v) not less than 20% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders would have been paid or credited to an exempt entity or exempt entities; or (vi) in the case where no money was paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders—if money had been so paid or credited by the trustee of the unit trust during the year of income, not less than 20% of the amount of that money would have been paid or credited to an exempt entity or exempt entities. (3) A unit trust shall not be taken to be a public unit trust in relation to a year of income by reason that units in the unit trust were offered to the public at any time during the year of income if the Commissioner is of the opinion that any of those units were offered to the public for the purpose, or for purposes that included the purpose, of enabling the unit trust to be treated as a public unit trust for the purposes of this Division in relation to the year of income. (4) Subject to subsection (5), a unit trust that, but for this subsection and subsection (7), would be a public unit trust in relation to a year of income by virtue only of subsection (1) shall be deemed not to be a public unit trust in relation to the year of income if, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, a unit or units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (a) the beneficial interests in the income of the unit trust; or (b) the beneficial interests in the property of the unit trust. (5) Subject to subsection (7), where by virtue of subsection (4), a unit trust would, but for this subsection, be deemed not to be a public unit trust in relation to a year of income by reason that, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (4) and the Commissioner is of the opinion that, having regard to: (a) the length of the period or the aggregate of the lengths of the periods in the year of income during which one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (4); and (b) any other matters that the Commissioner considers relevant; it is reasonable that the unit trust should be treated as a public unit trust in relation to the year of income, the unit trust shall be deemed to be a public unit trust in relation to the year of income. (6) For the purposes of subsections (4) and (5), a person (in this subsection referred to as the transferee ) to whom a right to acquire or become the holder of a unit in a unit trust is granted or transferred shall be deemed not to have such a right if the Commissioner is of the opinion, having regard to the financial circumstances of the transferee and to any other matters that the Commissioner considers relevant, that it was not intended by the person who granted or transferred the right to the transferee that the right would be exercised by the transferee. (7) Subject to subsection (8), a unit trust that, but for this subsection, would be a public unit trust in relation to a year of income by virtue only of subsection (1), shall be deemed not to be a public unit trust in relation to that year of income if: (a) not less than 75% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders was paid or credited to one person or persons not more than 20 in number; or (b) by reason of: (i) any provision in the instrument by which the trust was created, or any contract, agreement or instrument authorising the variation or abrogation of the rights attaching to any of the units in the unit trust or relating to the conversion, cancellation, extinguishment or redemption of any such units; (ii) any contract, agreement, option or instrument under which a person has power to acquire a unit or units in the unit trust; or (iii) any power, authority or discretion in a person in relation to the rights attaching to any of the units in the unit trust; the rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (iv) units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust; would have been held by one person or persons not more than 20 in number; (v) not less than 75% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders would have been paid or credited to one person or persons not more than 20 in number; or (vi) in the case where no money was paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders—if money had been so paid or credited by the trustee of the unit trust during the year of income, not less than 75% of the amount of that money would have been paid or credited to one person or persons not more than 20 in number. (8) A unit trust shall not be deemed by subsection (7) not to be a public unit trust in relation to a year of income by reason that rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied in the manner mentioned in paragraph (7)(b) if the Commissioner is of the opinion that the person or persons who were able to vary the rights in that manner intended not to vary the rights in that manner during the year of income. (9) For the purposes of subsections (1) and (3), units in a unit trust shall be taken to be offered to the public if and only if: (a) an offer is made to the public or to a section of the public to subscribe for or purchase the units; or (b) an invitation is issued to the public or to a section of the public to make offers to subscribe for or purchase the units. (10) For the purposes of this section, where any units in a unit trust (except a foreign entity to which subsection 102N(2) applies) are held by the trustee of another trust estate, a person who has a beneficial interest in property of that other trust estate that consists of those units (whether or not that beneficial interest is deemed to be held by virtue of the application of this subsection) shall be deemed to hold those units. (10A) Subsection (10) does not apply in relation to units in a unit trust that are held by the trustee of another trust estate if the other trust estate is a complying superannuation entity (within the meaning of the Income Tax Assessment Act 1997 ). (11) For the purposes of this section, a distribution of property of a unit trust to a unitholder shall be taken to be a payment of money to the unitholder of an amount equal to the value of the property. (12) For the purposes of this section: (a) a person, whether or not he or she holds units in the unit trust concerned; (b) his or her relatives; and (c) in relation to any units in respect of which they are such nominees, his or her nominees and the nominees of any of his or her relatives; shall be deemed to be one person.

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 164 of 2007, Sch 8 item 5, effective s 4, Sch 1 (items 27–35, 71), Sch 8 (items 1–5, 13(1)), Sch 10 (items 2–6) and Sch 11 (items 1–48, 78–80): 25 Sept 2007 (s 2(1) items 1, 2, 5, 8) Sch 10 (items 26–56): 1 July 2010 (s 2(1) item 6) Sch 12 (items 66–71): 27 Sept 2007 (s 2(1) item 9) | Amended by No 53 of 2016, Sch 6 item 10 | Sch 6 item 12 | Sch 6 item 14, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 102Q — Resident unit trusts

For the purposes of this Division, a unit trust is a resident unit trust in relation to a year of income if, at any time during the year of income: (a) either of the following conditions was satisfied: (i) any property of the unit trust was situated in Australia; (ii) the trustee of the unit trust carried on business in Australia; and (b) either of the following conditions was satisfied: (i) the central management and control of the unit trust was in Australia; (ii) a person who was a resident or persons who were residents held more than 50% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust.

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4))

s 102R — Public trading trusts

(1) A unit trust is a public trading trust in relation to a relevant year of income if: (a) where the relevant year of income is the year of income that commenced on 1 July 1985, the year of income commencing on 1 July 1986 or the year of income commencing on 1 July 1987: (i) the unit trust was established after 19 September 1985; (ii) the unit trust is a public unit trust in relation to the relevant year of income; (iii) the unit trust is a trading trust in relation to the relevant year of income; (iv) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a public trading trust in relation to a year of income preceding the relevant year of income; or (b) where the relevant year of income is the year of income commencing on 1 July 1988 or a subsequent year of income: (i) the unit trust is a public unit trust in relation to the relevant year of income; (ii) the unit trust is a trading trust in relation to the relevant year of income; (iii) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a public trading trust in relation to a year of income preceding the relevant year of income. (2) Where: (a) a unit trust would, but for this subsection, be a unit trust established on or before 19 September 1985; (b) the unit trust was not a trading trust on 19 September 1985; and (c) the unit trust became a trading trust on a day after 19 September 1985; the unit trust shall be taken, for the purposes of this section, to have been established after 19 September 1985. (3) For the purposes of subsection (2), a unit trust is a trading trust on a particular day if, on that day, the trustee: (a) carries on a trading business; or (b) controls or is able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business. (4) Where: (a) a unit trust would, but for this subsection, be a unit trust established on or before 19 September 1985; (b) if the year of income in which 19 September 1985 occurred had ended on that date, the unit trust would not have been a public unit trust in relation to that year of income; and (c) the Commissioner is satisfied that, at no time on or before that date, was it the intention of the trustee of the unit trust that the unit trust would become a public unit trust in relation to a year of income; the unit trust shall be taken, for the purposes of this section, to have been established after 19 September 1985. (5) In determining whether a unit trust is a public trading trust under this section, disregard any interest that the trust has that is disregarded under subsection 275 ‑ 10(4A) of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 53 of 2016, Sch 5 item 43 | Sch 5 item 51 | Sch 5 item 56, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4) | Amended by No 8 of 2020, Sch 2 item 18, effective Sch 2 (items 18, 19): 1 Apr 2020 (s 2(1) item 3)

s 102S — Taxation of net income of public trading trust

The trustee of a unit trust that is a public trading trust in relation to a relevant year of income shall be assessed and is liable to pay tax on the net income of the public trading trust of the relevant year of income at the rate declared by the Parliament for the purposes of this section.

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4))

s 102T — Modified application of Act in relation to certain unit trusts

(1) For the purpose of the application of this Act in relation to the imposition, assessment and collection of tax in respect of: (a) the net income of a public trading trust; and (b) the income or assessable income of a unitholder in a prescribed trust estate; the following provisions of this section have effect. Note: Under Subdivision 713 ‑ C of the Income Tax Assessment Act 1997 , this Act applies differently in relation to a public trading trust that chooses to form a consolidated group. (3) For the purposes of the application of sections 46A and 46B in accordance with subsection (2), the Commissioner may be satisfied, in relation to a unit trust dividend, that a transaction, operation, undertaking, scheme or arrangement was by way of dividend stripping or similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping if the Commissioner would have been satisfied, had the unit trust dividend been a dividend paid by a company, that the transaction, operation, undertaking, scheme or arrangement would have been a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping or, as the case requires, would have been similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping. (6) For the purposes of the application of the definition of year of income in subsection 6(1), the reference in that definition to a company (except a company in the capacity of a trustee) shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust. (7) A reference in the definition of person in subsection 6(1) to a company shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust. (8) The reference in section 158 to the taxable income of a company except income in respect of which it is assessable as trustee shall be read as including a reference to the net income of a public trading trust. (9) A reference in section 355 ‑ 35 of the Income Tax Assessment Act 1997 to a body corporate is to be read as including a reference to a body corporate acting in its capacity as trustee of a public trading trust. (11) A reference in subsection 44(1) or section 128B of this Act, in subsection 840 ‑ 805(3) of the Income Tax Assessment Act 1997 , in Subdivision 12 ‑ F in Schedule 1 to the Taxation Administration Act 1953 (except section 12 ‑ 225) or in subsection 12 ‑ 390(10) in that Schedule, to a company or to a company that is a resident shall be read as including a reference to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. (12) A reference in the definition of paid in subsection 6(1) or 44(1), or in section 128A or 128B, of this Act, or in Subdivision 12 ‑ F in Schedule 1 to the Taxation Administration Act 1953 (except section 12 ‑ 225), to a dividend shall be read as including a reference to a unit trust dividend. (13A) Subdivision 12 ‑ F in Schedule 1 to the Taxation Administration Act 1953 applies in respect of units in a prescribed trust estate in the same way as it applies in respect of shares. (14) A reference in subsection 44(1) to a shareholder in relation to a company shall be read as including a reference to a unitholder in a prescribed trust estate. (16) A reference in section 6B, Division 6 or subsection 128A(3) or 157(3) of this Act, Division 275 or Subdivision 840 ‑ M of the Income Tax Assessment Act 1997 or Subdivision 12 ‑ H in Schedule 1 to the Taxation Administration Act 1953 to a trust estate or to a trustee shall be read as not including a reference to a trust estate that is a public trading trust or to the trustee of a public trading trust, as the case may be. (19) For the purposes of subsection 44(1), a unit trust dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate shall, to the extent to which the unit trust dividend is attributable to profits derived by the trustee, be taken to be paid out of those profits. (20) For the purposes of section 128B, a unit trust dividend paid to a unitholder in a prescribed trust estate shall be deemed to be income derived by the unitholder at the time at which the unit trust dividend is paid. Non ‑ unit dividend (21) Subsections (2), (3), (4) and (20) apply as if references in those subsections to a unit trust dividend included a reference to a non ‑ unit dividend. (22) For the purposes of subsection 44(1), a non ‑ unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non ‑ unit dividend is attributable to a source in Australia, to be derived from a source in Australia. (22A) For the purposes of subsection 44(1), a non ‑ unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non ‑ unit dividend is attributable to a source outside Australia, to be derived from a source outside Australia. (23) If a provision of this Act that applies to a dividend: (a) is taken under this section to apply to a unit trust dividend; and (b) applies to a non ‑ share dividend in the same way as it applies to a dividend; that provision also applies to a non ‑ unit dividend in the same way as it applies to a dividend. Non ‑ unit equity interest (24) If a provision of this Act that applies to a share: (a) is taken under this section to apply to a unit in a prescribed trust estate; and (b) applies to a non ‑ share equity interest in a company in the same way as it applies to a share; that provision also applies to a non ‑ unit equity interest in a prescribed trust estate in the same way as it applies to a share. Equity holder (25) Subsections (1), (2), (18) and (20) apply as if references in those subsections to a unitholder included a reference to an equity holder who is not a unitholder. (26) If a provision of this Act that applies to a shareholder: (a) is taken because of this section to apply to a unitholder in a prescribed trust estate; and (b) applies to an equity holder in a company who is not a shareholder in the same way as it applies to a shareholder; that provision also applies to an equity holder in a prescribed trust estate who is not a unitholder in the same way as it applies to a shareholder. Definitions (27) In this section: equity holder in a prescribed trust estate means the holder of an equity interest in the prescribed trust estate. equity interest in a prescribed trust estate means: (a) a unit in the prescribed trust estate; or (b) any other interest that would be an equity interest in the prescribed trust estate if references in Division 974 of the Income Tax Assessment Act 1997 to a company included references to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. non ‑ unit dividend means a unit trust distribution that is not a unit trust dividend. non ‑ unit equity interest in a prescribed trust estate means an equity interest in the prescribed trust estate that is not a unit in the prescribed trust estate. unit trust distribution means a distribution, or an amount credited, that would be a unit trust dividend if references in the definition of unit trust dividend in section 102M to a unitholder were references to an equity holder.

Amendment history: Inserted by No 173 of 1985, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 58 of 1987, item 10, effective s 6–19: 5 June 1987 (s 2) | Amended by No 61 of 1987, item 11, effective s 6–33: 5 June 1987 (s 2) | Amended by No 62 of 1987, Sch 4 item 24, effective s 9–38 and Sch 4: 5 June 1987 (s 2(1), (3), (4)) | Amended by No 108 of 1987, item 14, effective s 4–40: 13 Nov 1987 (s 2) | Amended by No 35 of 1992, item 32, effective s 7–75: 25 May 1992 (s 2) | Amended by No 179 of 1999, Sch 18 item 23, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 163 of 2001, Sch 1 item 76 | Sch 1 item 77 | Sch 1 item 78, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 108–115, 126(7)), Sch 2 (items 1, 3, 4, 35, 37), Sch 3 (items 1–3, 6, 7), Sch 9, Sch 10 (item 43(1)) and Sch 11: 25 June 2004 (s 2(1) items 1, 12, 13, 16, 17, 21, 27, 28) Sch 1 (item 1): 30 June 2000 (s 2(1) item 2) Sch 10 (items 1, 2): 1 July 2000 (s 2(1) item 22) | Amended by No 64 of 2005, Sch 1 item 4, effective Sch 1 (items 1–6), Sch 3 (items 1–4) and Sch 4 (items 2–27, 38, 39): 26 June 2005 (s 2(1) items 2, 4) Sch 2 (items 1–9): 27 June 2005 (s 2(1) item 3) | Amended by No 101 of 2006, Sch 2 item 294 | Sch 2 item 296 | Sch 2 item 297 | Sch 2 item 298 | Sch 3 item 8, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 143 of 2007, Sch 1 item 54, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 32 of 2008, Sch 1 item 10 | Sch 1 item 11, effective Sch 1 (items 4–11, 58): 23 June 2008 (s 2) | Amended by No 14 of 2009, Sch 4 item 10, effective Sch 4 (items 6–10): 26 Mar 2009 (s 2(1) item 2) Sch 5 (items 1, 14(1)): 29 Jan 2009 (s 2(1) items 3, 7) Sch 5 (item 4): never commenced (s 2(1) item 4) | Amended by No 93 of 2011, Sch 1 item 355 | Sch 3 item 46, effective Sch 3 (items 5–14, 44–53) and Sch 4 (items 1–6): 8 Sept 2011 (s 2(1) items 3, 6, 7) Sch 3 (item 43): never commenced (s 2(1) item 5) | Amended by No 53 of 2016, Sch 4 item 4 | Sch 5 item 21 | Sch 6 item 13, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 102UA — What this Division is about

(1) The main purpose of this Division is to ensure that the trustee of a closely held trust with one or more trustee beneficiaries that are presently entitled to a share of the income or of a tax ‑ preferred amount of the trust advises the Commissioner soon after the end of the year of income of certain details about those trustee beneficiaries. This will allow the Commissioner to check whether the assessable income of the trustee beneficiaries includes the correct share of net income, and whether the net assets of the trustee beneficiaries reflect the receipt of the tax ‑ preferred amounts. (2) To achieve this purpose, the Division: (a) provides for the trustee to correctly identify the trustee beneficiaries within a specified period after the end of the year of income; and (b) if the trustee fails to do so, provides for taxation at a penalty rate (in the case of net income) or offences under the Taxation Administration Act 1953 (in the case of tax ‑ preferred amounts). (3) This Division also provides that, where the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the share of the net income of the closely held trust, there will also be taxation at a penalty rate.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 1 | Sch 4 item 2 | Sch 4 item 3, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UB — Definitions—general

In this Division: closely held trust has the meaning given by subsection 102UC(1). correct TB statement has the meaning given by section 102UG. present entitlement has a meaning affected by section 102UJ. tax offset has the same meaning as in the Income Tax Assessment Act 1997 . tax ‑ preferred amount has the meaning given by section 102UI. TB statement period has the meaning given by section 102UH. trustee beneficiary has the meaning given by section 102UD. trustee beneficiary non ‑ disclosure tax means tax payable under paragraph 102UK(2)(a) or 102UM(2)(a). untaxed part , of a share of the net income of a closely held trust, has the meaning given by section 102UE.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 4 | Sch 4 item 5 | Sch 4 item 6 | Sch 4 item 7 | Sch 4 item 8 | Sch 4 item 9 | Sch 4 item 10 | Sch 4 item 11 | Sch 4 item 12, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UC — Closely held trust

(1) A closely held trust is: (a) a trust where an individual has, or up to 20 individuals have between them, directly or indirectly, and for their own benefit, fixed entitlements to a 75% or greater share of the income, or a 75% or greater share of the capital, of the trust; or (b) a discretionary trust; except where the trust is an excluded trust. Trustees of discretionary trusts treated as individuals (2) For the purposes of paragraph (1)(a), if: (a) a trustee of a discretionary trust holds a fixed entitlement to a share of the income or capital of the trust mentioned in that paragraph directly or indirectly; and (b) no person holds that fixed entitlement directly or indirectly through the discretionary trust; the trustee is taken to hold that fixed entitlement directly or indirectly as an individual and for the individual’s own benefit. Individuals treated as single individual (3) For the purposes of paragraph (1)(a), all of the following are taken to be a single individual: (a) an individual, whether or not the individual holds fixed entitlements directly in the trust mentioned in that paragraph; (b) the individual’s relatives; (c) in relation to any fixed entitlements in respect of which other individuals are nominees of the individual or of the individual’s relatives—those other individuals. Definitions (4) In this section: discretionary trust means a trust that is not a fixed trust within the meaning of section 272 ‑ 65 in Schedule 2F. excluded trust means: (a) a trust to which paragraph (b), (c) or (d) of the definition of excepted trust in section 272 ‑ 100 in Schedule 2F applies; or (b) a unit trust whose units are listed on the stock market operated by ASX Limited. fixed entitlement has the meaning given by sections 272 ‑ 5, 272 ‑ 10, 272 ‑ 15 and 272 ‑ 40 in Schedule 2F. indirectly has the meaning given by section 272 ‑ 20 in Schedule 2F.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 13, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 97 of 2008, Sch 3 item 19, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3) | Amended by No 41 of 2011, Sch 5 item 379 | Sch 5 item 380 | Sch 5 item 381 | Sch 5 item 382, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 95 of 2019, Sch 4 item 1 | Sch 4 item 2, effective Sch 1 and Sch 4 (items 1–4, 6): 1 Jan 2020 (s 2(1) item 2)

s 102UD — Trustee beneficiary

A person is a trustee beneficiary of a closely held trust if the person is a beneficiary of the trust in the capacity of trustee of another trust.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2)

s 102UE — Meaning of untaxed part

(1) The untaxed part of a share of the net income of a closely held trust is so much of that share as is not covered by subsection (2). (2) The share of the net income of the closely held trust is covered by this subsection to the extent that: (a) the trustee of the closely held trust is assessed and liable to pay tax under subsection 98(4) in respect of the share; or (b) the share is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and liable to pay tax under subsection 98(4); or (c) the share is represented by or reasonably attributable to an amount from which an entity was required to withhold an amount under Subdivision 12 ‑ H in Schedule 1 to the Taxation Administration Act 1953 ; or (d) the share is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate was liable to pay trustee beneficiary non ‑ disclosure tax.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 43 of 2000, Sch 3 item 1 | Sch 3 item 2, effective s 4, Sch 2 and 3: 3 May 2000 (s 2) | Repealed and substituted by No 143 of 2007, Sch 4 item 12, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UG — Correct TB statement

Share of net income case (1) This section applies if a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97 and the share comprises or includes an untaxed part. Tax ‑ preferred amount case (2) This section also applies if a trustee beneficiary of a closely held trust is presently entitled at the end of a year of income to a share of a tax ‑ preferred amount of the trust. Correct TB statement (3) If this section applies, the trustee of the closely held trust makes a correct TB statement about the share if the trustee correctly states, in the approved form: (a) if the trustee beneficiary is a resident at the end of the year of income: (i) the name and tax file number of the trustee beneficiary; and (ii) the amount of the untaxed part of the share or the amount of the share of the tax ‑ preferred amount; and (b) if the trustee beneficiary is a non ‑ resident at the end of the year of income: (i) the name and address of the trustee beneficiary; and (ii) the amount of the untaxed part of the share or the amount of the share of the tax ‑ preferred amount. Note: If a closely held trust has multiple trustee beneficiaries, the requirements in subsection (3) will have to be met for each of them for the trustee of the closely held trust to avoid paying any trustee beneficiary non ‑ disclosure tax.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Repealed and substituted by No 143 of 2007, Sch 4 item 4 | Sch 4 item 15, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UH — TB statement period

The TB statement period , for the trustee of a trust in relation to a year of income, is the period from the end of the year of income until the end of: (a) the period within which the trustee is required to give to the Commissioner the trust’s return of income for the year of income; or (b) such further period as the Commissioner allows.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Repealed and substituted by No 43 of 2000, Sch 3 item 3 | Sch 3 item 9, effective s 4, Sch 2 and 3: 3 May 2000 (s 2) | Repealed and substituted by No 143 of 2007, Sch 4 item 7 | Sch 4 item 16, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UI — Tax ‑ preferred amount

The expression “tax ‑ preferred amount” of a trust means: (a) income of the trust that is not included in its assessable income in working out its net income; or (b) capital of the trust.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2)

s 102UJ — Extended concept of present entitlement to capital of a trust

For the purposes of this Division, section 95A applies in relation to capital of a trust in the same way as it applies to income of the trust.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Repealed and substituted by No 143 of 2007, Sch 4 item 17, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UK — Trustee beneficiary non ‑ disclosure tax where no correct TB statement

(1) Subject to subsection (2A), this section applies if: (a) a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97; and (b) the share comprises or includes an untaxed part; and (c) the trustee of the closely held trust is not covered by a determination under subsection (1A) for the year of income; and (ca) the closely held trust is none of the following: (i) a family trust (within the meaning of section 272 ‑ 75 in Schedule 2F); (ii) a trust in relation to which an interposed entity election has been made and is in force in accordance with section 272 ‑ 85 in Schedule 2F; (iii) a trust covered by subsection 272 ‑ 90(5) in Schedule 2F; and (d) during the TB statement period in relation to the year of income, the trustee of the closely held trust does not make and give to the Commissioner a correct TB statement about the share. Determination that a class of trustees is not required to give a correct TB statement (1A) The Commissioner may, by legislative instrument, determine that a specified class of trustees is not required to make a correct TB statement for a year of income. (1B) A determination under subsection (1A): (a) may be expressed to be subject to conditions; and (b) may be for one or more years of income. Consequences of section applying (2) If this section applies: (a) either: (i) if the trustee of the closely held trust is the only person in the trustee group (see subsection (3))—the trustee is liable to pay tax; or (ii) if the trustee of the closely held trust is not the only person in the trustee group—the persons in the trustee group are jointly and severally liable to pay tax; as imposed by the Taxation (Trustee Beneficiary Non ‑ disclosure Tax) Act (No. 1) 2007 , on the untaxed part; and (b) except for the purposes of sections 99, 99A and 99B and this Division, the untaxed part is not included in the assessable income of the trustee beneficiary under section 97. Note: Provisions dealing with the payment etc. of the tax under paragraph (a) (known as trustee beneficiary non ‑ disclosure tax) are set out in Subdivision D. Amendment of incorrect statement (2A) If: (a) during the TB statement period in relation to a year of income, the trustee of a closely held trust makes and gives to the Commissioner a statement, that the trustee believes on reasonable grounds is a correct TB statement, about a share of the net income of the trust; and (b) the statement is not a correct TB statement about the share, with the result that, apart from this subsection, this section applies; and (c) either: (i) the trustee could not reasonably have foreseen the event that caused the statement not to be a correct TB statement; or (ii) the statement is not a correct TB statement because of an inadvertent error; and (d) either: (i) before any trustee beneficiary non ‑ disclosure tax becomes due and payable on the untaxed part as a result of this section applying; or (ii) before the end of 4 years after any such tax becomes due and payable; the trustee advises the Commissioner in writing of any change that is necessary to make the statement a correct TB statement about the share; this section does not apply, and is taken never to have applied, to the untaxed part. Trustee group (3) The trustee group consists of the following: (a) the trustee of the closely held trust; (b) if the trustee of the closely held trust is a company—the directors of the company.

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2 | Sch 2 item 5 | Sch 2 item 8 | Sch 2 item 10, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 43 of 2000, Sch 3 item 4 | Sch 3 item 5 | Sch 3 item 7, effective s 4, Sch 2 and 3: 3 May 2000 (s 2) | Amended by No 143 of 2007, Sch 4 item 8 | Sch 4 item 19 | Sch 4 item 23 | Sch 4 item 36 | Sch 4 item 38 | Sch 4 item 52, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 95 of 2019, Sch 4 item 3, effective Sch 1 and Sch 4 (items 1–4, 6): 1 Jan 2020 (s 2(1) item 2)

s 102UL — Exclusion of directors of closely held trust from liability to pay tax

(1) This section applies if a director of a company that is the trustee of the closely held trust is included in the trustee group under section 102UK. Director not taking part in statement decision because of illness or other good reason (2) If, because of illness or for some other good reason, the director did not take part in any decision not to make the correct TB statement, the director is not included in the trustee group. Director otherwise not taking part in statement decision (3) If: (a) the director did not take part in any decision not to make the correct TB statement; and (b) either: (i) the director was not aware of the proposal to make such a decision; or (ii) the director was aware and took reasonable steps to prevent the making of the decision; the director is not included in the trustee group. Director taking part in statement decision (4) If: (a) the director took part in any decision not to make a correct TB statement; and (b) the director voted against, or otherwise disagreed with the decision; and (c) the director took reasonable steps to ensure that a correct TB statement would be made; the director is not included in the trustee group. Where no statement decision (5) If: (a) no decision was made not to make a correct TB statement; and (b) either: (i) the director, because of illness or for some other good reason, was not involved in the management of the company during the TB statement period in relation to the year of income; or (ii) the director took reasonable steps to ensure that a correct TB statement would be made; the director is not included in the trustee group.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 20, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UM — Trustee beneficiary non ‑ disclosure tax where share is distributed to trustee of closely held trust

(1) This section applies if: (a) a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97; and (b) the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the untaxed part of the share; and (c) trustee beneficiary non ‑ disclosure tax is not payable by the trustee of the closely held trust on the untaxed part under paragraph 102UK(2)(a). Consequences of section applying (2) If this section applies: (a) either: (i) if the trustee of the closely held trust is the only person in the trustee group (see subsection (3))—the trustee is liable to pay tax; or (ii) if the trustee of the closely held trust is not the only person in the trustee group—the persons in the trustee group are jointly and severally liable to pay tax; as imposed by the Taxation (Trustee Beneficiary Non ‑ disclosure Tax) Act (No. 2) 2007 , on the whole or that part of the untaxed part; and (b) except for the purposes of sections 99, 99A and 99B and this Division, the whole or that part of the untaxed part is not included in the assessable income of the trustee beneficiary under section 97. Note: Provisions dealing with the payment etc. of the tax under paragraph (a) (known as trustee beneficiary non ‑ disclosure tax) are set out in Subdivision D. Trustee group (3) The trustee group consists of the following: (a) the trustee of the closely held trust; (b) if the trustee of the closely held trust is a company—the directors of the company.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 23, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UN — Amount of trustee beneficiary non ‑ disclosure tax reduced by notional tax offset

(1) This section applies to trustee beneficiary non ‑ disclosure tax that a trustee group would otherwise be liable to pay on the whole or part of a share of the net income of a closely held trust. (2) The amount of the trustee beneficiary non ‑ disclosure tax is reduced by the amount of any tax offset to which the trustee of the closely held trust would be entitled in an assessment under section 99A if it were assumed that the trustee were assessed and liable to pay tax under that section on the whole or the part of the share of the net income.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 25, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UO — Payment of trustee beneficiary non ‑ disclosure tax

Due date (1) Trustee beneficiary non ‑ disclosure tax is due and payable at the end of: (a) 21 days after the TB statement period concerned ends; or (b) such later day as the Commissioner, in special circumstances, allows. Debt due (2) Trustee beneficiary non ‑ disclosure tax, when it becomes due and payable, is a debt due to the Commonwealth and payable to the Commissioner. (3) Any unpaid trustee beneficiary non ‑ disclosure tax may be sued for and recovered in a court of competent jurisdiction by the Commissioner suing in his or her official name. Application (4) Subsections (2) and (3) do not apply in relation to any trustee beneficiary non ‑ disclosure tax that becomes due and payable on or after 1 July 2000. Note: For provisions about collection and recovery of trustee beneficiary non ‑ disclosure tax and other amounts on or after 1 July 2000, see Part 4 ‑ 15 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 178 of 1999, Sch 1 item 40, effective s 4, Sch 1 (items 9–49A), Sch 2 (items 23–32, 35, 40–62, 92, 93): 22 Dec 1999 (s 2(1)) | Amended by No 179 of 1999, Sch 18 item 20, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 143 of 2007, Sch 4 item 26 | Sch 4 item 27 | Sch 4 item 28 | Sch 4 item 29 | Sch 4 item 30 | Sch 4 item 31, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UP — Late payment of trustee beneficiary non ‑ disclosure tax

If any of the trustee beneficiary non ‑ disclosure tax which a person is liable to pay remains unpaid 60 days after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the 60th day after the day by which the trustee beneficiary non ‑ disclosure tax was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the trustee beneficiary non ‑ disclosure tax; (ii) general interest charge on any of the trustee beneficiary non ‑ disclosure tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Repealed and substituted by No 178 of 1999, effective s 4, Sch 1 (items 9–49A), Sch 2 (items 23–32, 35, 40–62, 92, 93): 22 Dec 1999 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 1024, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 143 of 2007, Sch 4 item 32 | Sch 4 item 36, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UR — Notice of liability

(1) The Commissioner may give a person or persons, by post or otherwise, a notice specifying: (a) the amount of any trustee beneficiary non ‑ disclosure tax that the Commissioner has ascertained is payable by the person or persons; and (b) the day on which that tax became or will become due and payable. Effect of notice on liability etc. (2) The amount of the liability of a person or persons to trustee beneficiary non ‑ disclosure tax, and the due date for payment of the tax, are not dependent on, or in any way affected by, the giving of a notice. Amendment of notice (3) The Commissioner may at any time amend a notice. An amended notice is a notice for the purposes of this section. Inconsistency between notices (4) If there is an inconsistency between notices that relate to the same subject matter, the later notice prevails to the extent of the inconsistency. Objections (5) A person who is or persons who are dissatisfied with a notice made in relation to the person or persons may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 70 of 1999, Sch 1 item 2, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 33, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102URA — Request for notice of liability

(1) A person or persons may make a written request to the Commissioner to be given a notice under subsection 102UR(1) in respect of specified circumstances in which trustee beneficiary non ‑ disclosure tax may be payable. Compliance with request (2) The Commissioner must, subject to subsection (3) of this section, comply with the request. Further information (3) If the Commissioner considers that the notice cannot be given unless the person or persons give the Commissioner further information, the Commissioner must request the person or persons to give the Commissioner the information. Failure to give information (4) If the person or persons do not give the information, the Commissioner is not required to comply with the request to give the notice.

Amendment history: Inserted by No 43 of 2000, effective s 4, Sch 2 and 3: 3 May 2000 (s 2) | Amended by No 143 of 2007, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102USA — Recovery of trustee beneficiary non ‑ disclosure tax from trustee beneficiaries providing incorrect information etc. to head trustee

(1) This section applies if the requirements in subsections (2) and (3) are satisfied. Requirement for payment of trustee beneficiary non ‑ disclosure tax (2) A requirement for this section to apply is that: (a) the trustee of a closely held trust does not make a correct TB statement about a share of the net income of the trust of a year of income during the TB statement period in relation to the year of income; and (b) as a result, the trustee becomes liable, or the persons in the trustee group become jointly and severally liable, under section 102UK to pay trustee beneficiary non ‑ disclosure tax; and (c) the trustee or any of the persons in the trustee group pays an amount (the recoverable amount ), being some or all of the tax or any general interest charge under section 102UP in relation to the tax. Requirement for refusal etc. to provide information or for incorrect statement (3) A requirement for this section to apply is that: (a) either: (i) the trustee of the closely held trust was unable to make a correct TB statement about the share of the net income during the TB statement period because the trustee beneficiary in whose assessable income the share is included under section 97, when requested to do so, refused or failed to give information to the trustee; or (ii) the trustee of the closely held trust purported to make a correct TB statement about the share of the net income during the TB statement period but the statement was not a correct TB statement because it contained incorrect information given to the trustee of the closely held trust by the trustee beneficiary in whose assessable income the share is included under section 97, and the trustee honestly believed on reasonable grounds that the information was correct; and (b) the trustee of the closely held trust distributed to the trustee beneficiary an amount representing some or all of the share of the net income without withholding an amount under section 254 in respect of the recoverable amount. Consequences of section applying (4) If this section applies, the trustee or the person in the trustee group mentioned in paragraph (2)(c) may, in a court of competent jurisdiction, sue for the recoverable amount and recover it from the trustee beneficiary.

Amendment history: Inserted by No 43 of 2000, effective s 4, Sch 2 and 3: 3 May 2000 (s 2) | Repealed and substituted by No 143 of 2007, Sch 4 item 36, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 102UT — Requirement to make correct TB statement about trustee beneficiaries of tax ‑ preferred amounts

(1) If, at the end of a year of income: (a) a trustee beneficiary of a closely held trust is presently entitled to a share of a tax ‑ preferred amount of the trust; and (b) the trustee of the closely held trust is not covered by a determination under subsection 102UK(1A) for the year of income; and (c) the closely held trust is none of the following: (i) a family trust (within the meaning of section 272 ‑ 75 in Schedule 2F); (ii) a trust in relation to which an interposed entity election has been made and is in force in accordance with section 272 ‑ 85 in Schedule 2F; (iii) a trust covered by subsection 272 ‑ 90(5) in Schedule 2F; the trustee of the closely held trust must, during the TB statement period, make and send to the Commissioner a correct TB statement covering the share. (2) For the purposes of the Taxation Administration Act 1953 , if the trustee contravenes the requirement in subsection (1) of this section to make and send a statement to the Commissioner, then, subject to subsection (3) of this section, the trustee commits an offence against section 8C of that Act. (3) The trustee does not commit an offence against section 8C of the Taxation Administration Act 1953 as a result of a contravention of the requirement if: (a) the trustee did not know all the information required to be included in the statement; and (b) the trustee had taken reasonable steps to ascertain the information that he or she did not know; and (c) if the trustee did know some of the information, he or she included it in a statement that he or she sent to the Commissioner during the TB statement period. (4) The only burden of proof that the trustee bears in respect of subsection (3) is the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter in question existed.

Amendment history: Inserted by No 70 of 1999, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 143 of 2007, Sch 4 item 38 | Sch 4 item 39 | Sch 4 item 40, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 4 of 2016, Sch 4 item 397, effective Sch 4 (items 1, 188, 397–399): 10 Mar 2016 (s 2(1) item 6) | Amended by No 95 of 2019, Sch 4 item 4, effective Sch 1 and Sch 4 (items 1–4, 6): 1 Jan 2020 (s 2(1) item 2)

s 102UU — Trustee beneficiary may quote tax file number to trustee of closely held trust

A trustee beneficiary in respect of: (a) a share of the net income of a closely held trust for a year of income that is included in the assessable income of the trustee beneficiary of the trust under section 97; or (b) a share of a tax ‑ preferred amount of a closely held trust to which the trustee beneficiary of the trust is presently entitled at the end of a year of income; may quote his or her tax file number to the trustee of the closely held trust in connection with that trustee making a correct TB statement about that share. Note: Section 8WA of the Taxation Administration Act 1953 makes it an offence for a person to require or request another person to quote the other person’s tax file number unless provision is made by a taxation law for the other person to quote the number.

s 102UV — Trustee of closely held trust may record etc. tax file number

(1) This section applies if a trustee beneficiary in respect of: (a) a share of the net income of a closely held trust for a year of income that is included in the assessable income of the trustee beneficiary of the trust under section 97; or (b) a share of a tax ‑ preferred amount of a closely held trust to which the trustee beneficiary of the trust is presently entitled at the end of a year of income; quotes his or her tax file number to the trustee of the closely held trust in connection with that trustee making a correct TB statement about that share. (2) Section 8WB of the Taxation Administration Act 1953 does not prohibit the trustee of the closely held trust from: (a) recording the tax file number or maintaining such a record; or (b) using the tax file number in a manner connecting it with the identity of the trustee beneficiary; or (c) divulging or communicating the tax file number to a third person; in connection with that trustee making a correct TB statement about that share.

s 102UW — Application of Division

This Division applies if: (a) the net income of a trust estate exceeds nil; and (b) any of the following things are taken into account in working out the net income of the trust estate: (i) a capital gain (to the extent that an amount of the capital gain remained after applying steps 1 to 4 of the method statement in subsection 102 ‑ 5(1) of the Income Tax Assessment Act 1997 ); (ii) a franked distribution (to the extent that an amount of the franked distribution remained after reducing it by deductions that were directly relevant to it); (iii) a franking credit.

s 102UX — Adjustment of Division 6 assessable amount in relation to capital gains, franked distributions and franking credits

(1) Make the assumptions in the following subsections for the purposes of working out in accordance with Division 6 an amount: (a) included in the assessable income of a beneficiary of a trust estate under section 97, 98A or 100; or (b) in respect of which a trustee of a trust estate is liable to pay tax under section 98, in relation to a beneficiary of the trust estate; or (c) in respect of which a trustee of a trust estate is liable to pay tax under section 99 or 99A. Note: Those assumptions are made only for the purposes of working out the amounts mentioned in paragraphs (a), (b) and (c). They are not made for any other purposes (for example, determining the income of a trust estate, the net income of a trust estate, or the amount of a present entitlement of a beneficiary of a trust estate to the income of the trust estate). (2) Assume that the income of the trust estate were equal to the Division 6E income of the trust estate. (3) Assume that the net income of the trust estate were equal to the Division 6E net income of the trust estate. (4) Assume that the amount of a present entitlement of a beneficiary of the trust estate to the income of the trust estate were equal to the amount of the beneficiary’s Division 6E present entitlement to the income of the trust estate.

s 102UY — Interpretation

(1) Expressions used in this Division have the same meaning as in Division 6. (2) The Division 6E income , of the trust estate, is the income of the trust estate worked out on the assumption that amounts attributable to the things mentioned in paragraph 102UW(b) were disregarded. The Division 6E income of the trust estate cannot be less than nil. (3) The Division 6E net income , of the trust estate, is the net income of the trust estate worked out on the assumption that the things mentioned in paragraph 102UW(b) were disregarded. The Division 6E net income of the trust estate cannot be less than nil. (4) A beneficiary of the trust estate has an amount of a Division 6E present entitlement to the income of the trust estate that is equal to the amount of the beneficiary’s present entitlement to the income of the trust estate, decreased by: (a) for each capital gain taken into account as mentioned in paragraph 102UW(b)—so much of the beneficiary’s share of the capital gain as was included in the income of the trust estate; and (b) for each franked distribution taken into account as mentioned in paragraph 102UW(b)—so much of the beneficiary’s share of the franked distribution as was included in the income of the trust estate. (5) The following expressions in this Division have the same meaning as in the Income Tax Assessment Act 1997 : (a) share of a capital gain (see section 115 ‑ 227 of that Act); (b) share of a franked distribution (see section 207 ‑ 55 of that Act).

s 102V — Application of Division to non ‑ share dividends

(1) This Division: (a) applies to a non ‑ share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non ‑ share dividend in the same way as it applies to a dividend. (2) Subsection (1) does not apply to section 103A.

Amendment history: Inserted by No 163 of 2001, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2)

s 103 — Interpretation

(1) In this Division, unless the contrary intention appears: the relevant holding company or holding companies , in relation to another company in relation to a year of income of that other company, means: (a) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4)—the public company or public companies referred to in paragraph 103A(4)(a); or (b) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4B)—the listed company or listed companies referred to in paragraphs 103A(4B)(a) and (b). (2) For the purposes of this Division, a person is the nominee of another person in relation to shares if that first ‑ mentioned person may be required to exercise his or her voting power in relation to those shares at the direction of, or holds those shares directly or indirectly on behalf of or for the benefit of, that second ‑ mentioned person. (3) For the purposes of this Division, shares in a company shall be deemed to be held indirectly on behalf of or for the benefit of a person (not being a private company, trustee or partnership) if, in the event of the payment of a dividend on those shares, that person would, otherwise than as a shareholder of the company, receive the whole or a part of that dividend if there were successive distributions of the relative parts of that dividend to and by each of any private companies, trustees or partnerships interposed between the company paying the dividend and that person. (4) For the purposes of this Division, a company shall be taken to have been a listed company during a period that was included in a year of income of another company (in this subsection referred to as the relevant year of income ) where: (a) if the period was included in the year of income of the first ‑ mentioned company (in this subsection referred to as the corresponding year of income ) that corresponded with the relevant year of income—the first ‑ mentioned company was by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to the corresponding year of income; or (b) if the period was included in the year of income of the first ‑ mentioned company that immediately preceded or immediately followed the corresponding year of income—the first ‑ mentioned company was, by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to that preceding or following year of income, as the case may be. (5) A reference in this Division to a right, power, option, agreement or instrument shall be read as including a reference to a right, power, option, agreement or instrument that is not enforceable by legal proceedings whether or not it was intended to be so enforceable. (6) For the purposes of this Division, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.

Amendment history: Amended by No 46 of 1938, effective 28 Dec 1938 | Amended by No 17 of 1940, effective 24 June 1940 | Amended by No 65 of 1940, effective s 3, 14 and 15: 1 Jan 1941 (s 2(2)) s 10: 28 Nov 1940 (s 2(3)) Remainder: 14 Dec 1940 (s 2(1)) | Amended by No 58 of 1941, effective s 27: 13 Oct 1939 (s 27(2)) Remainder: 31 Dec 1941 | Amended by No 22 of 1942, effective 7 June 1942 (s 2) | Amended by No 50 of 1942, effective s 26: 28 July 1942 (s 26(2)) Remainder: 6 Oct 1942 (s 2) | Amended by No 10 of 1943, effective s 17 and 26 (new s 251L and 251O added): 1 July 1943 (s 2(2) and gaz 1943, p 1289) s 19–25: 1 Apr 1943 (s 2(3)) Remainder: 20 Mar 1943 (s 2(1)) | Amended by No 3 of 1944, effective s 7–9: 1 July 1943 (s 2(2)) s 16–20 and 22–25: 1 July 1944 (s 2(3)) Remainder: 3 Apr 1944 (s 2(1)) | Amended by No 37 of 1945, effective s 3–9: 11 Oct 1945 (s 2) | Repealed and substituted by No 44 of 1948, effective 22 Dec 1948 | Amended by No 48 of 1950, effective s 3–34 and 36: 14 Dec 1950 (s 2) | Repealed and substituted by No 44 of 1951, effective 7 Dec 1951 (s 2) | Repealed and substituted by No 90 of 1952, effective s 3–24: 18 Nov 1952 (s 2) | Repealed by No 90 of 1952, effective s 3–24: 18 Nov 1952 (s 2) | Amended by No 45 of 1953, item 18, effective 26 Oct 1953 (s 2) | Amended by No 101 of 1956, effective s 3–13(b) and 14–26: 15 Nov 1956 (s 2(1)) s 13(c): 1 July 1956 (s 2(2)) | Amended by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 103 of 1965, item 29, effective 14 Dec 1965 (s 2) | Amended by No 4 of 1968, item 7, effective 8 May 1968 (s 2(1)) | Amended by No 47 of 1972, item 5 | item 6 | item 12, effective s 3–12: 7 June 1972 (s 2) | Amended by No 51 of 1973, item 15 | item 3, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 164 of 1973, item 11 | item 12 | item 21, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2) | Amended by No 216 of 1973, Sch 1 item 11 | Sch 2 item 11, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 20 of 1974, Sch 1 item 10 | Sch 1 item 22, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 80 of 1975, item 32 | item 33 | Sch 2 item 54, effective 20 June 1975 (s 2) | Amended by No 126 of 1977, item 7, effective 10 Nov 1977 (s 2) | Amended by No 108 of 1981, item 27, effective s 4–25: 24 June 1981 (s 2) | Amended by No 49 of 1986, item 10, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 51 of 1986, item 17, effective s 3–35: 22 July 1986 | Amended by No 62 of 1987, Sch 4 item 25, effective s 9–38 and Sch 4: 5 June 1987 (s 2(1), (3), (4)) | Amended by No 224 of 1992, item 61, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 96 of 2004, effective Sch 2 (items 1–80, 85–138, 140, 141) and Sch 3: 29 June 2004 (s 2(1) items 3, 5, 6) | Amended by No 101 of 2006, Sch 1 item 109 | Sch 1 item 110, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 105 | Sch 5 item 276, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 103A — Private companies

(1) For the purposes of this Division, a company is a private company in relation to the year of income if the company is not a public company in relation to the year of income. (2) For the purposes of subsection (1), a company is, subject to the succeeding provisions of this section, a public company in relation to the year of income if: (a) shares in the company, not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits, were listed for quotation in the official list of a stock exchange, being a stock exchange in Australia or elsewhere, as at the last day of the year of income; (b) at all times during the year of income, the company was a co ‑ operative company as defined by section 117; (c) the company has not, at any time since its formation, been carried on for the purposes of profit or gain to its individual members and was, at all times during the year of income, prohibited by the terms of its constituent document from making any distribution, whether in money, property or otherwise, to its members or to relatives of its members; or (d) the company is: (i) a mutual life assurance company; (ii) a friendly society dispensary; (iii) a body constituted by a law of the Commonwealth or of a State or Territory and established for public purposes, not being a company within the meaning of the law in force in a State or Territory relating to companies; (iv) a company in which a Government or a body referred to in subparagraph (iii) had a controlling interest on the last day of the year of income; or (v) in relation to the year of income, a subsidiary of a public company. (3) Subject to subsection (5), a company is not, by virtue of paragraph (2)(a) or (b), a public company for the purposes of subsection (1) in relation to the year of income where: (a) at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, shares representing not less than three ‑ quarters of the value of the shares in the company, other than shares entitled to a fixed rate of dividend only; (b) at any time during the year of income, not less than three ‑ quarters of the voting power in the company was capable of being exercised by one person or by persons not more than 20 in number; (c) not less than three ‑ quarters of: (i) the amount of any dividend paid by the company during the year of income; or (ii) if more than one dividend was paid by the company during the year of income—the total amount of all the dividends paid by the company during the year of income; was paid to one person or to persons not more than 20 in number; or (d) a dividend was not paid by the company during the year of income but the Commissioner is of the opinion that, if a dividend had been paid by the company at any time during the year of income, not less than three ‑ quarters of the amount of that dividend would have been paid to one person or to persons not more than 20 in number. (3A) Subject to subsection (3B), a company shall not be taken for the purposes of subsection (1) to be a public company in relation to a year of income by reason that a body constituted and established as mentioned in subparagraph (2)(d)(iii) (in this subsection referred to as the public body ) had a controlling interest in the company on the last day of the year of income if: (a) by reason of: (i) any of the provisions contained in the constituent document of the company as in force on the last day of the year of income; or (ii) any right, power, option or agreement in existence on the last day of the year of income that related to the management or conduct of the affairs of the company, including any right, power, option or agreement that related to the issue, allotment or redemption of shares, or the grant, withdrawal or variation of rights in respect of shares; the exercise by the public body of any right or power in connexion with the company (being a right or power relating to the exercise by the public body of a controlling interest in the company), whether on the last day of the year of income or at any later time, could have been prevented; (b) rights or powers of the public body in connexion with the company were exercised during the year of income otherwise than for the benefit of the public body or were not exercised in circumstances where it might reasonably have been expected that they would have been exercised; (c) any shares in the company that were held by the public body on the last day of the year of income were acquired by the public body for no consideration or for a consideration that, in the ordinary course of commercial dealing, would be considered inadequate; (d) in pursuance of any agreement entered into before the end of the year of income, the public body agreed to dispose of all or any of the shares in the company that were held by the public body on the last day of the year of income, being a disposal that was to take place at any time after the last day of the year of income; (e) a dividend was paid by the company at a time during the year of income when the public body had a controlling interest in the company, and less than one ‑ half of the amount of that dividend was paid to the public body; or (f) a dividend was not paid by the company at a time during the year of income when the public body had a controlling interest in the company but the Commissioner is of the opinion that, if a dividend had been paid by the company at such a time, less than one ‑ half of the amount of the dividend would have been paid to the public body. (3B) Subsection (3A) does not apply in relation to a company in relation to a year of income if the Commissioner is satisfied that no shares in the company that were held by the public body referred to in that subsection on the last day of the year of income were allotted or transferred to the public body for the purpose, or for purposes that included the purpose, of enabling the company to be treated as a public company in relation to the year of income for the purposes of subsection (1), or in pursuance of an agreement entered into, or a course of conduct engaged in, for the purpose, or for purposes that included the purpose, of enabling the company to be so treated. (3C) Paragraph (3A)(c) does not apply to an acquisition that is taken by section 70 ‑ 30 or 70 ‑ 110 of the Income Tax Assessment Act 1997 to have occurred. (4) Subject to subsection (4D), a company is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if: (a) at all times during the year of income all the shares in the first ‑ mentioned company were beneficially owned by a company which, or companies each of which, is a public company for the purposes of subsection (1) in relation to the year of income of that company (in this subsection referred to as the corresponding year of income ) that corresponds with the first ‑ mentioned year of income but which is not, or none of which is: (i) a company to which paragraph (2)(c) applies in relation to the corresponding year of income; or (ii) a subsidiary of a public company for the purposes of this section in relation to the corresponding year of income by reason of subsection (4B); (b) the corresponding year of income, or each of the corresponding years of income, referred to in paragraph (a) ended on the same day as the year of income first ‑ mentioned in that paragraph; (c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the relevant holding company or holding companies in connexion with the first ‑ mentioned company so as to prevent the relevant holding company or holding companies from exercising for its or their own benefit the whole of the voting power in the first ‑ mentioned company or from receiving for its or their own benefit the whole of any dividends that might be paid by the first ‑ mentioned company or of any distribution that might be made of capital of the first ‑ mentioned company; and (d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the relevant holding company or holding companies in connexion with the first ‑ mentioned company. (4A) For the purposes of paragraphs 4(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of the relevant holding company or holding companies in connexion with the company first ‑ mentioned in subsection (4) (in this subsection referred to as the first ‑ mentioned company ) if at that time that person had or has a right, power or option (whether by virtue of any provision in the constituent document of the first ‑ mentioned company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the relevant holding company or holding companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights. (4B) Subject to subsection (4D), a company that is not, by virtue of subsection (4), a subsidiary of a public company for the purposes of this section in relation to the year of income is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if: (a) at all times during the year of income the voting power in the first ‑ mentioned company was controlled, or was capable of being controlled, by a listed company or listed companies, either directly or through one or more companies, trustees or partnerships interposed between the first ‑ mentioned company and the listed company or listed companies; (b) at all times during the year of income a listed company or listed companies had a right to receive, either directly or through one or more companies, trustees or partnerships interposed between the first ‑ mentioned company and the listed company or listed companies, more than one ‑ half of any dividends that might be paid by the first ‑ mentioned company and more than one ‑ half of any distribution that might be made of capital of the first ‑ mentioned company; (c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the listed company or listed companies in connexion with the first ‑ mentioned company so as to prevent the listed company or listed companies from exercising for its or their own benefit control of the voting power in the first ‑ mentioned company or from receiving for its or their own benefit more than one ‑ half of any dividends that might be paid by the first ‑ mentioned company or of any distribution that might be made of capital of the first ‑ mentioned company; and (d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the listed company or listed companies in connexion with the first ‑ mentioned company. (4C) For the purposes of paragraphs (4B)(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of a listed company or listed companies in connexion with another company if at that time that person had, or has, a right, power or option (whether by virtue of any provision in the constituent document of the other company or of any company interposed between the listed company or listed companies and the other company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the listed company or listed companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights. (4D) A company (in this subsection and subsection (4E) referred to as the company concerned ) that would, apart from this subsection, be a subsidiary of a public company for the purposes of this section in relation to the year of income shall be deemed, for the purposes of this section, not to be a subsidiary of a public company in relation to the year of income if the Commissioner is satisfied that: (a) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4)—the affairs of the company concerned were managed or conducted in the year of income in the interests of persons other than the relevant holding company or holding companies; or (b) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4B)—the affairs of the company concerned were managed or conducted in the year of income without proper regard to the interests of the relevant holding company or holding companies. (4E) In considering whether the affairs of the company concerned were managed or conducted in the year of income as mentioned in subsection (4D), the Commissioner shall have regard to: (a) the circumstances in which the relevant holding company or holding companies acquired a direct or indirect beneficial interest or interests in shares in the company concerned (whether the interest was, or the interests were, acquired before or during the year of income) and, in particular, whether those circumstances were capable of explanation by reference to ordinary commercial dealing; (b) the provisions of the constituent document of the company concerned as in force during the year of income that related to the management or conduct of the affairs of that company, including the provisions of the constituent document that related to the appointment or removal of directors, the issue, allotment or redemption of shares, the grant, withdrawal or variation of rights in respect of shares, the payment of dividends and the investment or other application of moneys of that company; (c) the nature and extent of any right, power, option or agreement in existence during the year of income that related to the management or conduct of the affairs of the company concerned, including any right, power, option or agreement that related to the appointment or removal of directors, the issue, allotment or redemption of shares, the grant, withdrawal or variation of rights in respect of shares, the payment of dividends and the investment or other application of moneys of that company; (d) whether rights of the relevant holding company or holding companies in connexion with the company concerned were exercised during the year of income otherwise than for the benefit of the relevant holding company or holding companies or were not exercised in circumstances where it might reasonably have been expected that they would have been exercised; (e) the nature and source of the income derived by the company concerned during the year of income and whether the derivation by that company of that income was capable of explanation by reference to ordinary commercial dealing; (f) the manner in which the moneys of the company concerned were applied during the year of income and, in particular, whether they were lent to, or invested or otherwise made available for the use or benefit of, a person or persons other than the relevant holding company or holding companies and, if any such moneys were so lent, invested or made available: (i) the terms and conditions upon which the moneys were so lent, invested or made available; (ii) whether the lending, investment or making available of those moneys was capable of explanation by reference to ordinary commercial dealing; and (iii) the connexion (if any) between that person or those persons, the directors of the company concerned and the directors of, or the beneficial owners of the shares in, the company from which the company concerned received dividends before or during the year of income; (g) the respective amounts of any dividends in respect of shares in the company concerned that were paid during the year of income or might reasonably be expected to be paid after that year by that company and the circumstances in which those dividends were, or might be expected to be, paid; and (h) any other relevant matters. (5) Where a company would not, under the preceding provisions of this section, be a public company for the purposes of subsection (1) in relation to the year of income but the Commissioner is of the opinion that, having regard to: (a) the number of persons who were, at any time during the year of income, capable of controlling the company and whether any of those persons was a public company; (b) the market value of the shares issued by the company before the end of the year of income; (c) the number of persons who beneficially owned shares in the company at the end of the year of income; and (d) any other matters that the Commissioner thinks relevant; it is reasonable that the company should be treated as a public company for the purposes of subsection (1) in relation to the year of income, the company shall be deemed to be a public company for those purposes in relation to the year of income. (5A) The Commissioner may, under subsection (5), form an opinion that it is reasonable that a company should be treated as a public company for the purposes of subsection (1) in relation to a year of income notwithstanding that the forming of such an opinion by the Commissioner would impose on the company a liability to pay a greater amount of income tax than the company would otherwise be liable to pay. (6) Notwithstanding anything in the preceding provisions of this section, the Commissioner may treat a company as not being, by virtue of paragraph (2)(a) or (b), a public company for the purposes of subsection (1) in relation to the year of income if the Commissioner is of the opinion that, by reason of: (a) any provisions in the company’s constituent document, or in any contract, agreement or instrument, authorizing the variation or abrogation of the voting rights or rights to dividends in respect of any shares in the company or relating to the conversion, exchange or redemption of any such shares; (b) any contract, agreement, option or instrument under which a person has power to acquire shares in the company; or (c) any power or authority in a person in relation to the voting rights or rights to dividends in respect of any shares in the company; the voting rights or rights to dividends in respect of any shares in the company were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (d) not less than three ‑ quarters of the voting power in the company would have been capable of being exercised by one person or by persons not more than 20 in number; (e) not less than three ‑ quarters of: (i) the amount of any dividend paid by the company during the year of income; or (ii) if more than one dividend was paid by the company during the year of income—the total amount of all the dividends paid by the company during the year of income; would have been paid to one person or to persons not more than 20 in number; or (f) in the case where the company did not pay a dividend during the year of income—if a dividend had been paid by the company at any time during the year of income, not less than three ‑ quarters of the amount of that dividend would have been paid to one person or to persons not more than 20 in number. (7) For the purposes of this section: (a) a person, whether or not he or she holds shares in the company concerned; (b) his or her relatives; and (c) in relation to any shares in respect of which they are such nominees, his or her nominees and the nominees of any of his or her relatives; shall be deemed to be one person.

Amendment history: Inserted by No 44 of 1951, effective 7 Dec 1951 (s 2) | Repealed by No 90 of 1952, effective s 3–24: 18 Nov 1952 (s 2) | Inserted by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 47 of 1972, effective s 3–12: 7 June 1972 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 165 of 1973, effective s 3–36: 11 Dec 1973 (s 2) | Amended by No 216 of 1973, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 20 of 1974, Sch 1 item 22, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 126 of 1977, item 8, effective 10 Nov 1977 (s 2) | Amended by No 92 of 1981, effective Sch: 1 July 1982 (s 2(3)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 154 of 1981, effective s 4–31 and 39–41: 26 Oct 1981 (s 2) | Amended by No 47 of 1984, effective 25 June 1984 (s 2) | Amended by No 121 of 1997, Sch 1 item 70 | Sch 5 item 81, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 63 of 1998, Sch 7 item 22 | Sch 7 item 23, effective Sch 1–4 and Sch 5 (items 1–22, 25–53, 58–67): 1 July 1998 (s 2(1) and gaz 1998, No S325) Sch 5 (items 23, 24, 54–57): 1 July 1998 (s 2(2)) | Amended by No 57 of 2002, Sch 12 item 4, effective Sch 1: 1 July 2001 (s 2(1) item 2) Sch 3, 5, 6, Sch 9 (items 1–8, 41–44), Sch 11 (items 1, 5), Sch 12 ,(items 8–10, 14, 15): 3 July 2002 (s 2(1) items 4, 7, 8, 16, 18, 24, 27) Sch 4 (items 1, 2, 4) and Sch 12 (item 42): 1 July 2000 (s 2(1) items 5, 46) Sch 10: 17 Nov 1999 (s 2(1) item 17) Sch 12 (items 4, 11): 1 July 1998 (s 2(1) items 21, 25) Sch 12 (items 5, 6): 21 Dec 1998 (s 2(1) item 22) Sch 12 (item 7): 7 Dec 1998 (s 2(1) item 23) Sch 12 (items 12, 13): 23 June 1998 (s 2(1) item 26) Sch 12 (item 38): 1 Oct 1997 (s 2(1) item 42) Sch 12 (item 40): 22 Dec 1999 (s 2(1) item 44) Sch 12 (items 43, 65): 1 July 1997 (s 2(1) items 47, 63) | Amended by No 101 of 2004, item 104A | item 4, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 101 of 2006, Sch 2 item 299, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 277 | Sch 5 item 278, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 109 — Excessive payments to shareholders, directors and associates deemed to be dividends

(1) If a private company pays or credits to an associated person an amount (in this subsection called the excessive amount ) that is, or purports to be: (a) remuneration for services rendered by the associated person; or (b) an allowance, gratuity or compensation in consequence of the retirement of the associated person from an office or employment held by the associated person in the company, or upon the termination of any such office or employment; so much (if any) of the excessive amount as exceeds an amount that, in the opinion of the Commissioner, is reasonable: (c) is not an allowable deduction; and (d) shall, for the purposes of this Act other than Division 11A of Part III, be deemed to be a dividend paid by the company: (i) to the associated person as a shareholder in the company; (ii) out of profits derived by the company; and (iii) on the last day of the year of income of the company in which the excessive payment or credit is made. Note: This section does not apply to an amount if the amount is paid to a CGT concession stakeholder under subsection 152 ‑ 325(1) of the Income Tax Assessment Act 1997 (see subsection 152 ‑ 325(11)). (2) For the purposes of this section: (a) a transfer of property shall be deemed to be the payment of an amount equal to the value of the property; and (b) a reference to an associated person, in relation to a company, is a reference to: (i) a person who is, or has been, a shareholder in, or director of, the company; or (ii) a person who is an associate, within the meaning of section 318, of a person who is, or has been, a shareholder in, or director of, the company.

Amendment history: Repealed and substituted by No 90 of 1952, effective s 3–24: 18 Nov 1952 (s 2) | Amended by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Repealed and substituted by No 108 of 1987, effective s 4–40: 13 Nov 1987 (s 2) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 101 of 2006, Sch 2 item 25 | Sch 2 item 26 | Sch 2 item 302, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 42 of 2009, Sch 2 item 17 | Sch 2 item 38, effective Sch 1 (items 11–16), Sch 2 (items 17, 18) and Sch 4 (item 1): 23 June 2009 (s 2(1) items 2, 4, 8)

s 109B — Simplified outline of this Division

The following is a simplified outline of this Division: This Division treats 3 kinds of amounts as dividends paid by a private company: • amounts paid by the company to a shareholder or shareholder’s associate (see section 109C); • amounts lent by the company to a shareholder or shareholder’s associate (see sections 109D and 109E); • amounts of debts owed by a shareholder or shareholder’s associate to the company that the company forgives (see section 109F). This treatment makes the amounts assessable income of the shareholder or associate (under section 44). However, some payments, loans and forgiven debts are not treated as dividends. (See Subdivisions C and D.) Also, this Division does not apply to demerger dividends. (See Subdivision DA.) An amount may be treated as a dividend even if it is paid or lent by the company to the shareholder or associate through one or more interposed entities. (See Subdivision E.) An amount may also be included in the assessable income of a shareholder or shareholder’s associate if: (a) a company has an unpaid present entitlement to income of a trust; and (b) the trustee makes a payment or loan to, or forgives a debt of, the shareholder or associate. (See Subdivisions EA and EB.) If the total of the amounts is more than the company’s distributable surplus, only the part of the total equal to the distributable surplus is treated as dividends. (See section 109Y.) This Division applies to non ‑ share equity interests and non ‑ share dividends in the same way it applies to shares and dividends.

Amendment history: Inserted by No 47 of 1998, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 163 of 2001, Sch 1 item 80, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 90 of 2002, Sch 16 item 17, effective s 4, Sch 10, Sch 15 (items 16–18) and Sch 16 (items 2–20, 54, 55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) | Amended by No 23 of 2005, Sch 3 item 35, effective s 4 and Sch 3 (items 14–74, 111(3)–(5), 112–114): 21 Mar 2005 (s 2(1) items 1, 6) | Amended by No 79 of 2007, Sch 1 item 1, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 75 of 2010, Sch 1 item 9, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7)

s 109BA — Application of Division to non ‑ share dividends

This Division: (a) applies to a non ‑ share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non ‑ share dividend in the same way as it applies to a dividend.

Amendment history: Inserted by No 163 of 2001, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2)

s 109BB — Application of Division to closely ‑ held corporate limited partnerships

This Division applies to a corporate limited partnership in relation to a year of income in the same way as it applies to a private company in relation to a year of income, if, any time during the year of income: (a) the partnership has fewer than 50 members; or (b) any entity has, directly or indirectly, and for the entity’s own benefit, an entitlement to a 75% or greater share of the income or capital of the partnership. Example: Michael has an entitlement to an 80% share of the income of 2 fixed trusts. The 2 fixed trusts have, between them, an entitlement to 100% of the income of a corporate limited partnership. For the purposes of paragraph (b), Michael has, indirectly, and for his own benefit, an entitlement to a 75% or greater share of the income of the partnership.

s 109BC — Application of Division to non ‑ resident companies

(1) This Division applies, in relation to a payment, loan or debt forgiveness, in relation to a private company that is a non ‑ resident as if: (a) references in this Division to a year of income of the company were references to a tax accounting period in relation to the company in relation to a foreign tax imposed by a tax law of: (i) if the company is a resident of only one foreign country—that foreign country; or (ii) otherwise—the foreign country to which subsection (2) applies; and (b) references in this Division to the lodgment day for the year of income were references to the due date for lodgment of the company’s return of income for the tax accounting period under that tax law. (2) For the purposes of subparagraph (1)(a)(ii), this subsection applies to a foreign country (the relevant country ) if: (a) the company is a resident of the relevant country; and (b) of all the tax accounting periods: (i) in relation to the company in relation to the foreign taxes imposed by the tax laws of the foreign countries of which the company is resident; and (ii) during which the payment, loan or debt forgiveness is made; the tax accounting period under the tax law of the relevant country ends first; and (c) if more than one of the tax accounting periods mentioned in paragraph (b) end first—the due date for lodgment of the company’s return of income for the tax accounting period under the tax law of the relevant country is not later than the due date for lodgment for any of the other tax accounting periods that end first. (3) In this section: tax accounting period has the meaning given by section 317. tax law has the meaning given by section 317. Note: Section 109L prevents amounts from being included in assessable income under this Division if the amounts are included in, or excluded from, assessable income under another provision of this Act, such as the rules relating to CFCs and FIFs.

s 109C — Payments treated as dividends

When private company is taken to pay a dividend (1) A private company is taken to pay a dividend to an entity at the end of the private company’s year of income if the private company pays an amount to the entity during the year and either: (a) the payment is made when the entity is a shareholder in the private company or an associate of such a shareholder; or (b) a reasonable person would conclude (having regard to all the circumstances) that the payment is made because the entity has been such a shareholder or associate at some time. Note 1: Some payments do not give rise to dividends under Subdivision D. This section also does not give rise to a dividend if the amount is paid to a CGT concession stakeholder under subsection 152 ‑ 325(1) of the Income Tax Assessment Act 1997 (see subsection 152 ‑ 325(11)). Note 2: A private company is treated as making a payment to a shareholder or shareholder’s associate if an interposed entity makes a payment to the shareholder or associate. See Subdivision E. Amount of dividend (2) The dividend is taken to equal the amount paid, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company’s distributable surplus. What is a payment to an entity? (3) In this Division, payment to an entity means: (a) a payment to the extent that it is to the entity, on behalf of the entity or for the benefit of the entity; and (b) a credit of an amount to the extent that it is: (i) to the entity; or (ii) on behalf of the entity; or (iii) for the benefit of the entity; and (c) a transfer of property to the entity. Note: See also section 109CA ( Payment includes provision of asset). Loans are not payments (3A) However, a loan to an entity is not a payment to the entity. Note: Payments converted to loans before the private company’s lodgment day are treated as loans (see subsection 109D(4A)). Value of payment by transfer of property (4) The amount of a payment consisting of a transfer of property is the amount that would have been paid for the transfer by parties dealing at arm’s length less any consideration given by the transferee for the transfer. (The amount of a payment is nil if the consideration given by the transferee equals or exceeds the amount that would have been paid at arm’s length for the transfer.)

Amendment history: Inserted by No 47 of 1998, Sch 8 item 1 | Sch 8 item 109B | Sch 8 item 109F | Sch 8 item 109J | Sch 8 item 109K | Sch 8 item 109L | Sch 8 item 109N | Sch 8 item 109X | Sch 8 item 109Z, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 79 of 2007, Sch 1 item 2, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 42 of 2009, Sch 2 item 18, effective Sch 1 (items 11–16), Sch 2 (items 17, 18) and Sch 4 (item 1): 23 June 2009 (s 2(1) items 2, 4, 8) | Amended by No 75 of 2010, Sch 1 item 12 | Sch 1 item 13 | Sch 1 item 27, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7)

s 109CA — Payment includes provision of asset

(1) In this Division, payment to an entity includes the provision of an asset for use by the entity. Note: This includes provision under a lease or licence. Example: Yacht builder Mainbrace Enterprises Pty Ltd owns a yacht for the purpose of sales demonstrations. With the private company’s permission, one of its shareholders uses the yacht on weekends. The company has made a payment to the shareholder, unless one of the exceptions to subsection (1) applies. (2) The time the payment is made is the time the entity first: (a) uses the asset with the permission of the provider of the asset; or (b) has a right to use the asset (whether alone or together with other entities), at a time when the provider of the asset does not have a right: (i) to use the asset; or (ii) to provide the asset for use by another entity. Example: Paragraph (a) could apply if a shareholder were driving a company car with the company’s permission. Paragraph (b) could apply if the shareholder had the car parked at his or her house or at another place of his or her choosing. (3) However, if the use or right continues into another income year of the entity, treat the provision of the asset for use in the other income year as being a separate payment made at the start of that year. Exceptions (4) Subsection (1) does not apply if the provision of the asset would, if done in respect of the employment of an employee, be a minor benefit under section 58P of the Fringe Benefits Tax Assessment Act 1986 . (5) Subsection (1) does not apply to the extent that, if the entity had incurred and paid expenditure in respect of the provision of the asset, a once ‑ only deduction would have been allowable to the entity in respect of the expenditure, ignoring Divisions 28 (Car expenses) and 900 (Substantiation rules) of the Income Tax Assessment Act 1997 . (6) Subsection (1) does not apply to the provision of a dwelling, if: (a) the entity, or an associate of the entity, carries on a business; and (b) the entity or associate: (i) uses; or (ii) is granted or has a lease, licence or other right to use; land, water or a building for the purpose of carrying on the business; and (c) the provision of the dwelling to the entity is connected with that use or with that lease, licence or other right. Note: For the meaning of land , see section 2B of the Acts Interpretation Act 1901 . (7) Subsection (1) does not apply to the provision of a dwelling, if: (a) the dwelling is the main residence of the entity; and (b) the provider of the dwelling is a private company; and (c) the private company acquired the dwelling before 1 July 2009; and (d) the private company would meet the conditions in section 165 ‑ 12 of the Income Tax Assessment Act 1997 (which is about the company maintaining the same owners) if, despite subsection 165 ‑ 12(1), the ownership test period were the period: (i) starting on the start of 1 July 2009; and (ii) ending at the time of payment, worked out under subsection (2) of this section. (7A) Subsection (1) does not apply to the provision of a dwelling to the entity if: (a) the dwelling is a flat or home unit that is part of a complex of 2 or more flats or home units; and (b) the provider of the dwelling is a company that owns a legal or equitable interest in the land on which the complex is erected; and (c) there is more than one share in the company, and each share (whether singly or as part of a parcel of shares) gives the relevant shareholder the right to occupy a flat or home unit in the complex; and (d) each flat or home unit in the complex is covered by a share, or a parcel of shares, in the company; and (e) the dwelling is provided to the entity because a shareholder holds such a share, or parcel of shares; and (f) the company does not have legal or equitable interests in any assets other than legal or equitable interests in: (i) the complex, and the land on which it is erected; and (ii) any related land and buildings; and (iii) any related plant, machinery, equipment, furniture or fittings; and (iv) any assets relating to the matters mentioned in paragraph (g); and (g) the assessable income of the company is derived predominantly from: (i) managing and maintaining the complex (including the assets mentioned in subparagraphs (f)(i), (ii) and (iii)); and (ii) interest and dividends relating to income derived from managing and maintaining the complex (including the assets mentioned in those subparagraphs). (7B) Subsection (7A) does not apply in a case to which Subdivision E (about interposed entities) applies, if the company mentioned in that subsection is interposed between: (a) a private company; and (b) a shareholder, or an associate of a shareholder, of the private company. (8) Section 118 ‑ 120 of the Income Tax Assessment Act 1997 (Extension to adjacent land) applies in relation to subsections (6) to (7A) of this section in the same way as it applies in relation to Subdivision 118 ‑ B of that Act. (9) Subsection (1) does not apply if the provision of the asset to the entity is a transfer of property to the entity. Note: For transfers of property, see paragraph 109C(3)(c). Value of payment (10) Subject to subsection (11), the amount of the payment is: (a) the amount that would have been paid for the provision of the asset by the parties dealing at arm’s length; less (b) any consideration given for the provision of the asset by the entity. (11) The amount of the payment is nil if the consideration given by the entity equals or exceeds the amount that would have been paid at arm’s length for the provision of the asset.

Amendment history: Inserted by No 75 of 2010, Sch 1 item 12 | Sch 1 item 32, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7) | Amended by No 46 of 2011, Sch 2 item 689, effective Sch 2 (items 688–692) and Sch 3 (items 10, 11): 27 Dec 2011 (s 2(1) items 5, 12) | Amended by No 12 of 2012, Sch 6 item 4 | Sch 6 item 251, effective s 4 and Sch 6 (items 1, 2, 188, 189, 219–234, 248, 252–255): 21 Mar 2012 (s 2(1) items 1, 6, 31) Sch 6 (items 30, 31): 15 Mar 2007 (s 2(1) item 12) Sch 6 (items 153–156): 22 Mar 2012 (s 2(1) item 26) | Amended by No 84 of 2022, Sch 3 item 27, effective Sch 3 (items 18–27, 33): 1 Jan 2023 (s 2(1) item 2)

s 109D — Loans treated as dividends

Loans treated as dividends in year of making (1) A private company is taken to pay a dividend to an entity at the end of one of the private company’s years of income (the current year ) if: (a) the private company makes a loan to the entity during the current year; and (b) the loan is not fully repaid before the lodgment day for the current year; and (c) Subdivision D does not prevent the private company from being taken to pay a dividend because of the loan at the end of the current year; and (d) either: (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time. Note 1: Some repayments cannot be counted for the purpose of this subsection. See section 109R. Note 2: A private company is treated as making a loan to a shareholder or shareholder’s associate if an interposed entity makes a loan to the shareholder or associate. See Subdivision E. Amount of dividend (1AA) The amount of the dividend taken under subsection (1) to have been paid is the amount of the loan that has not been repaid before the lodgment day for the current year, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company’s distributable surplus. Loans treated as dividends in year following that of making (1A) A private company is taken to pay a dividend to an entity at the end of the private company’s year of income (the current year ) if: (a) the private company made a loan to the entity during the previous year of income; and (b) it made the loan in the course of a winding ‑ up of the private company by a liquidator; and (c) the loan is not fully repaid by the end of the current year; and (d) either: (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time. Subdivision D (other than section 109R) does not apply to loans covered by this subsection. Amount of dividend (2) The amount of the dividend taken under subsection (1A) to have been paid is the amount of the loan that has not been repaid at the end of the current year, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company’s distributable surplus. What is a loan? (3) In this Division, loan includes: (a) an advance of money; and (b) a provision of credit or any other form of financial accommodation; and (c) a payment of an amount for, on account of, on behalf of or at the request of, an entity, if there is an express or implied obligation to repay the amount; and (d) a transaction (whatever its terms or form) which in substance effects a loan of money. In which year of income is a loan made? (4) For the purposes of this Division, a loan is made to an entity at the time the amount of the loan is paid to the entity by way of loan or anything described in subsection (3) is done in relation to the entity. Payment converted to loan before lodgment day (4A) If: (a) a private company makes a payment to an entity at a time in a year of income; and (b) the payment is converted to a loan before the end of the private company’s lodgment day for the year of income; for the purposes of this Division, treat the events mentioned in paragraphs (a) and (b) as the private company making a loan to the entity at the time mentioned in paragraph (a). Loans made before 4 December 1997 (5) If the terms of a loan made before 4 December 1997 are varied on or after that day by extending the term of the loan or increasing its amount, this Division applies to the loan as if it were made on the new terms when the variation occurred. When is the lodgment day? (6) In this Division, the lodgment day for a private company’s year of income is the earlier of: (a) the due date for lodgment of the private company’s return of income for the year of income; and (b) the date of lodgment of the private company’s return of income for the year of income. Note: For the lodgment day for a private company that is a non ‑ resident, see section 109BC.

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109E | Sch 8 item 109G | Sch 8 item 109M | Sch 8 item 109N | Sch 8 item 109P | Sch 8 item 109U | Sch 8 item 109W | Sch 8 item 109X | Sch 8 item 109Z | Sch 8 item 7, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 41 of 2005, Sch 9 item 1 | Sch 9 item 3 | Sch 9 item 4 | Sch 9 item 5 | Sch 9 item 6 | Sch 9 item 12, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Amended by No 79 of 2007, Sch 1 item 2 | Sch 1 item 3 | Sch 1 item 7 | Sch 1 item 30 | Sch 1 item 32, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 75 of 2010, Sch 1 item 14 | Sch 1 item 28, effective Sch 1 (items 1–33, 35) and Sch 6 (items 2–6): 29 June 2010 (s 2(1) item 2) Sch 2 (items 1, 2, 25): 1 July 2010 (s 2(1) item 3) Sch 5 (items 2–6): 28 June 2010 (s 2(1) item 7)

s 109E — Amalgamated loan from a previous year treated as dividend if minimum repayment not made

Amalgamated loan treated as dividend in first year in which payment is less than minimum yearly repayment (1) A private company is taken to pay a dividend to an entity at the end of one of the private company’s years of income (the current year ) if: (a) the private company made an amalgamated loan to the entity in an earlier year of income; and (b) the amalgamated loan is not repaid at the end of the current year; and (c) the amount (if any) paid to the private company during the current year in relation to the amalgamated loan falls short of the minimum yearly repayment of the amalgamated loan worked out under subsection (5) for the current year; and (d) section 109Q does not apply in relation to the current year. Note: The amalgamated loan does not give rise to a dividend for that year if the minimum yearly repayment is not made and the entity satisfies the Commissioner that treating the loan as a dividend would cause hardship. See section 109Q. Amount of dividend (2) The amount of the dividend is taken to be the amount of the shortfall mentioned in paragraph (1)(c), subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company’s distributable surplus. What is an amalgamated loan? (3) For the purposes of this Division, a private company is taken to make a loan (the amalgamated loan ) to a single entity during a year of income if the private company makes one or more loans ( constituent loans ) to the entity during the year, each of which: (a) is not fully repaid before the lodgment day for the year; and (b) would cause the company to be taken under section 109D to pay a dividend to the entity at the end of the year, apart from section 109N; and (c) has the same maximum term for the purposes of that section. The amount of the amalgamated loan is the sum of the amounts of the constituent loans that have not been repaid before the lodgment day for the year of income in which the amalgamated loan is made. (3A) Subsection (3B) applies if: (a) a private company is taken to have made an amalgamated loan (the old amalgamated loan ) during a year of income (the original year of income ); and (b) the maximum term of the old amalgamated loan under subsection 109N(3) was 7 years; and (c) in a later year of income (the later year of income ): (i) a constituent loan taken account of by the old amalgamated loan becomes secured by a mortgage over real property; and (ii) the term of the constituent loan is extended; and (d) as a result of the mortgage, the maximum term of the constituent loan under subsection 109N(3) is 25 years; and (e) the term of the constituent loan after the extension (including the period before the extension during which the constituent loan was in existence) does not exceed 25 years. (3B) For the purposes of this Division in relation to the later year of income and subsequent years of income: (a) treat the constituent loan as a new amalgamated loan that takes account of that constituent loan; and (b) treat the new amalgamated loan as having been made just before the start of the later year of income; and (c) treat the amount of the new amalgamated loan just before the start of the later year of income as the amount of the constituent loan that had not been repaid at that time; and (d) unless paragraph (e) applies—reduce the amount of the old amalgamated loan just before the start of the later year of income by the amount of the new amalgamated loan at that time; and (e) if the constituent loan was the only constituent loan taken account of by the old amalgamated loan—disregard the old amalgamated loan. Payments in relation to constituent loans treated as payments in relation to amalgamated loan (4) For the purposes of this Division, a payment to the private company in relation to a constituent loan in a year of income after the one in which the constituent loan was made is taken to be a payment in relation to the amalgamated loan that takes account of the constituent loan. Minimum yearly repayment (5) The minimum yearly repayment of an amalgamated loan for a year of income is the amount worked out using the formula in subsection (6). However, the minimum yearly repayment of an amalgamated loan for a year of income is the amount worked out under the regulations, if they provide for working it out. Formula for minimum yearly repayment (6) The formula for the minimum yearly repayment for a year of income is: where: current year’s benchmark interest rate is the benchmark interest rate for the year of income for which the minimum yearly repayment is being worked out. remaining term is the difference between: (a) the number of years in the longest term of any of the constituent loans that the amalgamated loan takes account of; and (b) the number of years between the end of the private company’s year of income in which the loan was made and the end of the private company’s year of income before the year of income for which the minimum yearly repayment is being worked out; rounded up to the next higher whole number if the difference is not already a whole number. Note: Section 109R provides that certain payments relating to a loan are not to be taken into account for the purposes of working out the minimum yearly repayment. Benchmark interest rate used to work out how much of a payment relating to amalgamated loan is a repayment (7) Work out the amount of an amalgamated loan repaid by the end of a year of income on the basis that interest is payable on the balance of the loan from time to time in a year of income at a rate equal to the benchmark interest rate for the year of income.

Amendment history: Inserted by No 47 of 1998, Sch 8 item 1 | Sch 8 item 109F | Sch 8 item 109P | Sch 8 item 109Q | Sch 8 item 109R | Sch 8 item 109Z, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 41 of 2005, Sch 9 item 7 | Sch 9 item 8, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Amended by No 79 of 2007, Sch 1 item 4 | Sch 1 item 5 | Sch 1 item 6 | Sch 1 item 9 | Sch 1 item 11 | Sch 1 item 13 | Sch 1 item 15, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5)

s 109F — Forgiven debts treated as dividends

Forgiven debt treated as dividend (1) A private company is taken to pay a dividend to an entity at the end of the private company’s year of income if all or part of a debt the entity owed the private company is forgiven in that year and either: (a) the amount is forgiven when the entity is a shareholder in the private company, or an associate of such a shareholder; or (b) a reasonable person would conclude (having regard to all the circumstances) that the amount is forgiven because the entity has been such a shareholder or associate at some time. Note: In some cases forgiving a debt does not give rise to a dividend. See section 109G. Amount of dividend (2) The amount of the dividend equals the amount of debt forgiven, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company’s distributable surplus. When is a debt forgiven? (3) An amount of a debt is forgiven for the purposes of this Division if and when the amount would be forgiven under section 245 ‑ 35 or 245 ‑ 37 of the Income Tax Assessment Act 1997 , assuming the amount were a debt to which Subdivisions 245 ‑ C to 245 ‑ G of that Act apply. Note: Division 245 of the Income Tax Assessment Act 1997 applies to forgiveness of certain commercial debts. Discharge of debt by transfer of property is not forgiveness (4) Despite subsection (3), an amount of debt is not forgiven for the purposes of this Division if the obligation to pay the amount is discharged by a payment to the creditor consisting of a transfer of property. Note: Subsection 109C(4) explains how to work out the value of a payment consisting of a transfer of property. Debt forgiveness by debt parking (5) An amount of debt an entity (the debtor ) owes a private company is also forgiven for the purposes of this Division if: (a) the private company assigns the right to receive payment of the amount to another entity (the new creditor ) who is either: (i) an associate of the debtor; or (ii) a party to an arrangement with the debtor about the assignment; and (b) a reasonable person would conclude (having regard to all the circumstances) that the new creditor will not exercise the assigned right. Debt forgiveness by failure to rely on obligation to pay (6) An amount of debt an entity (the debtor ) owes a private company is also forgiven for the purposes of this Division if a reasonable person would conclude (having regard to all the circumstances) that the private company will not insist on the entity paying the amount or rely on the entity’s obligation to pay the amount. (The amount is forgiven when a reasonable person would first reach that conclusion.) Forgiveness of amalgamated loan debt (7) If a private company forgives an amount of debt resulting from a constituent loan taken into account in working out the amount of an amalgamated loan under subsection 109E(3), the private company is taken to forgive the same amount of the debt resulting from the amalgamated loan. This section operates on only the earliest debt forgiveness (8) If the same debt is forgiven for the purposes of this Division at different times under different provisions of this section, this section operates on the first forgiveness only. Example: Subsection (3) of this section provides that a debt is forgiven if it has not been paid by the time a statute of limitations prevents recovery of the debt. (It does this by applying paragraph 245 ‑ 35(b) of the Income Tax Assessment Act 1997 .) The debt might already have been forgiven under subsection (6) of this section (because a reasonable person would have concluded earlier that the private company was not going to insist on payment). This section would apply to the forgiveness under subsection (6) but not the forgiveness under subsection (3).

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109B | Sch 8 item 109G | Sch 8 item 109Z, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 79 of 2010, Sch 2 item 13 | Sch 2 item 14 | Sch 2 item 15, effective Sch 1 (items 1, 2, 17–26, 53, 57, 66), Sch 3 (item 1), Sch 4 (items 1, 9–37, 51) and Sch 5 (items 1, 3–5, 13): 1 July 2010 (s 2(1) items 2, 4) Sch 2 (items 1, 10–15): 1 July 2010 (s 2(1) item 3)

s 109G — Debt forgiveness that does not give rise to a dividend

Forgiveness of debt owed by company generally not treated as dividend (1) A private company is not taken under this Division to pay a dividend because a debt owed to it by another company is forgiven. Note: This does not apply to a debt owed by a company as trustee. (See section 109ZE.) Forgiveness of debts under Bankruptcy Act not treated as dividends (2) A private company is not taken under this Division to pay a dividend because a debt is forgiven because the debtor becomes a bankrupt or because of Part X of the Bankruptcy Act 1966 . Forgiveness of loan debt does not give rise to dividend if loan gives rise to dividend under section 109D (3) A private company is not taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan if, because of the loan, the private company is taken: (a) under section 109D to pay a dividend at the end of that year or an earlier one; or (b) under former subsection 108(1) to pay a dividend on the last day of that year or an earlier one. Reduced dividend for forgiveness of loan debt if loan causes dividend under section 109E (3A) Subsection (3B) applies if: (a) a private company is taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan; and (b) the private company is taken under section 109E to pay a dividend at the end of an earlier year of income in relation to the loan. (3B) The amount of the dividend mentioned in paragraph (3A)(a) is reduced by the amount of the dividend mentioned in paragraph (3A)(b) (but not below zero). Note: There may be more than one reduction under this subsection if the private company has been taken under section 109E to pay more than one dividend in relation to the loan. Commissioner may treat forgiveness as not giving rise to dividend (4) A private company is not taken under this Division to pay a dividend because of the forgiveness of a debt owed by an entity if the Commissioner is satisfied that: (a) the debt was forgiven because payment of the debt would have caused the entity undue hardship; and (b) when the entity incurred the debt, the entity had the capacity to pay the debt; and (c) the entity lost the ability to pay the debt in the foreseeable future as a result of circumstances beyond the entity’s control.

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109F, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 79 of 2007, Sch 1 item 7 | Sch 1 item 8 | Sch 1 item 9, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5)

s 109H — Simplified outline of this Subdivision

The following is a simplified outline of this Subdivision: This Subdivision sets out rules about payments and loans that are not treated as dividends. The following sorts of payments are not treated as dividends: • payments of genuine debts (section 109J); • payments to other companies (section 109K); • payments that are otherwise assessable or that are specifically excluded from assessable income (section 109L). The following sorts of loans are not treated as dividends: • loans to other companies (section 109K); • loans that are otherwise assessable (section 109L); • loans made in the ordinary course of business on ordinary commercial terms (section 109M); • loans that meet criteria for minimum interest rate and maximum term (section 109N); • certain loans and distributions by liquidators (section 109NA); • loans that are for the purpose of funding the purchase of certain ESS interests under an employee share scheme (section 109NB). An amalgamated loan may not be treated as a dividend if the Commissioner is satisfied that doing so would cause undue hardship. (See section 109Q.) This Subdivision also provides for some loan repayments and interest payments to private companies to be disregarded if they are made with the intention of borrowing a similar amount from a private company later. (See section 109R.)

Amendment history: Inserted by No 47 of 1998, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 56 of 2007, Sch 3 item 14, effective Sch 3 (items 1–7, 14–16, 39): 12 Apr 2007 (s 2) | Amended by No 133 of 2009, Sch 1 item 16, effective Sch 1 (items 9–20, 86, 87): 14 Dec 2009 (s 2(1) item 2)

s 109J — Payments discharging pecuniary obligations not treated as dividends

A private company is not taken under section 109C to pay a dividend because of the payment of an amount, to the extent that the payment: (a) discharges an obligation of the private company to pay money to the entity; and (b) is not more than would have been required to discharge the obligation had the private company and entity been dealing with each other at arm’s length.

s 109K — Inter ‑ company payments and loans not treated as dividends

A private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan the private company makes to another company. Note: This does not apply to a payment or loan to a company in its capacity as trustee. (See section 109ZE.)

s 109L — Certain payments and loans not treated as dividends

(1) A private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan the private company makes to an entity, to the extent that the payment or loan would be included in the entity’s assessable income apart from this Division (as it operates in conjunction with section 44). (2) In addition, a private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan that the private company made to an entity to the extent that a provision of this Act (other than this Division) has the effect that the payment or loan is not included in the entity’s assessable income even though it would otherwise be included.

s 109M — Loans made in the ordinary course of business on arm’s length terms not treated as dividends

A private company is not taken under section 109D to pay a dividend because of a loan made: (a) in the ordinary course of the private company’s business; and (b) on the usual terms on which the private company makes similar loans to parties at arm’s length.

s 109N — Loans meeting criteria for minimum interest rate and maximum term not treated as dividends

Criteria (1) A private company that makes a loan to an entity in one of the private company’s years of income is not taken under section 109D to pay a dividend at the end of the year of income because of the loan if, before the lodgment day for the year of income: (a) the agreement that the loan was made under is in writing; and (b) the rate of interest payable on the loan for years of income after the year in which the loan is made equals or exceeds the benchmark interest rate for the year; and (c) the term of the loan does not exceed the term (the maximum term ) for that kind of loan worked out under subsection (3). Benchmark interest rate (2) The benchmark interest rate for the year of income is the Indicator Lending Rates—Bank variable housing loans interest rate last published by the Reserve Bank of Australia before the start of the year of income. However, the benchmark interest rate is the rate worked out under the regulations, if they provide for working it out. Maximum term (3) The maximum term is: (a) 25 years for a loan if: (i) 100% of the value of the loan is secured by a mortgage over real property that has been registered in accordance with a law of a State or Territory; and (ii) when the loan is first made, the market value of that real property (less the amounts of any other liabilities secured over that property in priority to the loan) is at least 110% of the amount of the loan; and (b) 7 years for any other loan. However, the maximum term for a loan is the period worked out under the regulations, if they provide for working out the maximum term for that kind of loan. (3A) Reduce the maximum term under paragraph (3)(a) for a loan (the new loan ) in accordance with subsection (3B) if: (a) the new loan results from the refinancing of another loan (the old loan ); and (b) the maximum term of the old loan under subsection (3) was 7 years; and (c) the maximum term of the new loan under subsection (3) is 25 years (disregarding this subsection). (3B) The amount of the reduction is equal to the length of the period: (a) starting when the old loan was made; and (b) ending when the old loan was refinanced. (3C) Reduce the maximum term under paragraph (3)(b) for a loan (the new loan ) in accordance with subsection (3D) if: (a) the new loan results from the refinancing of another loan (the old loan ); and (b) the maximum term of the old loan under subsection (3) was 25 years; and (c) the maximum term of the new loan under subsection (3) is 7 years (disregarding this subsection); and (d) the length of the period: (i) starting when the old loan was made; and (ii) ending when the old loan was refinanced; exceeds 18 years. (3D) The amount of the reduction is the excess mentioned in paragraph (3C)(d). Regulations may adopt rate as published from time to time (4) Regulations made for the purposes of subsection (2) may apply, adopt or incorporate a rate published in an instrument after they are made or take effect, or a rate contained in an instrument from time to time despite any other Act.

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109E | Sch 8 item 109H | Sch 8 item 109Z | Sch 8 item 10, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 140 of 2003, Sch 1 item 27, effective Sch 1 (item 27): 1 Jan 2005 (s 2(1) item 3) | Amended by No 41 of 2005, Sch 9 item 9 | Sch 9 item 10, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Amended by No 79 of 2007, Sch 1 item 6 | Sch 1 item 10 | Sch 1 item 12 | Sch 1 item 14 | Sch 1 item 15 | Sch 1 item 30 | Sch 1 item 32, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5)

s 109NA — Certain liquidator’s distributions and loans not treated as dividends

A private company is not taken under section 109C or subsection 109D(1) to pay a dividend because of a distribution or loan made in the course of the winding ‑ up of the company by a liquidator. Note: However, if such a loan is not fully repaid by the end of the following year of income, the company will be taken to have paid a dividend under subsection 109D(1A).

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109H, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1))

s 109NB — Loans to purchase shares under employee share schemes not treated as dividends

A private company is not taken under section 109D to pay a dividend because of a loan made solely for the purpose of enabling the shareholder, or an associate of the shareholder, to acquire an ESS interest under an employee share scheme (within the meaning of the Income Tax Assessment Act 1997 ) to which: (a) Subdivision 83A ‑ B, and the provisions referred to in paragraphs 83A ‑ 33(1)(a) to (c), of that Act apply; or (aa) Subdivision 83A ‑ B, and the provisions referred to in paragraphs 83A ‑ 35(1)(a) and (b), of that Act apply; or (b) Subdivision 83A ‑ C of that Act applies.

Amendment history: Inserted by No 47 of 1998, Sch 8 item 109H, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 56 of 2007, Sch 3 item 15, effective Sch 3 (items 1–7, 14–16, 39): 12 Apr 2007 (s 2) | Repealed and substituted by No 133 of 2009, Sch 1 item 17, effective Sch 1 (items 9–20, 86, 87): 14 Dec 2009 (s 2(1) item 2) | Amended by No 105 of 2015, Sch 1 item 1, effective Sch 1 (items 1, 44): 1 July 2015 (s 2)