Income Tax Assessment Act 1936

s 269-47 — Abnormal trading where holding trust

Holding trust and subsidiary trust (1) If a unit trust has fixed entitlements directly or indirectly to all of the income and capital of another unit trust: (a) the first trust is a holding trust of the second; and (b) the second is a subsidiary trust of the first. Abnormal trading causing or ending holding ‑ subsidiary relationship (2) The transaction that causes a trust to become, or to cease to be, a holding trust of a subsidiary trust (the bottom subsidiary trust) is an abnormal trading in units in the bottom subsidiary trust unless: (a) the holding trust is itself a subsidiary trust of one or more holding trusts (each of which is a higher holding trust ); and (b) immediately before and after the transaction, the bottom subsidiary trust is a subsidiary trust of one or more of the higher holding trusts. Abnormal trading while holding ‑ subsidiary relationship exists (3) While one or more trusts are holding trusts of the same subsidiary trust, there is an abnormal trading in units in the subsidiary trust if and only if, and at the time at which, there is an abnormal trading in units in the holding trust that is not itself a subsidiary trust of another holding trust.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-49 — No abnormal trading where proportionate issue of units

If the issue of units in a unit trust to existing unit holders does not cause each unit holder’s proportion of the total fixed entitlements to shares of the income and capital of the trust to change, then, except for the purposes of section 269 ‑ 20, the issue is disregarded in determining whether there has been an abnormal trading in units in the unit trust.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-50 — More than a 50% stake in income or capital

More than a 50% stake in income (1) If there are individuals who have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of a trust, those individuals have more than a 50% stake in the income of the trust. More than a 50% stake in capital (2) If there are individuals who have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the trust, those individuals have more than a 50% stake in the capital of the trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-55 — Passing the 50% stake test

(1) If, at all times during a period, or at 2 times: (a) the same individuals have more than a 50% stake in the income of a trust; and (b) the same individuals (who may be different from those in paragraph (a)) have more than a 50% stake in the capital of the trust; the trust passes the 50% stake test for the period or in respect of the 2 times. (2) If a trust is a widely held unit trust it is taken to pass the 50% stake test for a period or in respect of 2 times if it is reasonable to assume that the requirements of paragraphs (1)(a) and (b) are satisfied in respect of the period or the 2 times.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-60 — Pattern of distributions test

A trust passes the pattern of distributions test for an income year if, before the end of 2 months after the end of the income year: (a) the trust distributed directly or indirectly to the same individuals, for their own benefit, a greater than 50% share of all test year distributions of income (see subsection 269 ‑ 65(1)); and (b) the trust distributed directly or indirectly to the same individuals (who may be different from those in paragraph (a)), for their own benefit, a greater than 50% share of all test year distributions of capital (see subsection 269 ‑ 65(3)).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 269 | Sch 2F item 272 | Sch 2F item 14 | Sch 2F item 15 | Sch 2F item 19, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-65 — Test year distribution of income or capital

Test year distribution of income (1) A test year distribution of income is the total of all distributions of income made by the trust in any of the following periods, provided the period does not begin more than 6 years before the beginning of the income year: (a) the period from the beginning of the income year until 2 months after its end; (b) if the trust distributed income before the trigger year (see subsection (2))—the income year, before the trigger year, that is closest to the trigger year; (c) if paragraph (b) does not apply and the trust distributed income in the trigger year—the trigger year; (d) if neither paragraph (b) nor paragraph (c) applies—the income year, closest to the trigger year, in which the trust distributed income; (e) each intervening income year (if any) between the one in paragraph (a) and the one in paragraph (b), (c) or (d). Trigger year (2) If this Subdivision is being applied for the purposes of section 267 ‑ 20, the trigger year is the loss year mentioned in that section. If it is being applied for the purposes of section 267 ‑ 25, the trigger year is the year in which the debt mentioned in that section was incurred. Test year distribution of capital (3) Subsection (1) applies in the same way to distributions of capital made by the trust, to determine what is a test year distribution of capital .

Amendment history: Inserted by No 17 of 1998, Sch 2F item 269 | Sch 2F item 14 | Sch 2F item 15 | Sch 2F item 19, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 124 of 2013, Sch 2 item 60 | Sch 2 item 61 | Sch 2 item 62, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22)

s 269-70 — When individual receives different percentages

For the purposes of section 269 ‑ 60, if the trust does not distribute to an individual the same percentage of income or capital for every test year distribution, the trust is taken to have distributed to the individual, for every test year distribution, the smallest percentage that it distributed to the individual for any of the test year distributions.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-75 — Incomplete distributions

For the purposes of section 269 ‑ 60, if, before the end of 2 months after the end of the income year: (a) the trust has distributed directly or indirectly the whole or part of a test year distribution of income or test year distribution of capital to a company, partnership or trust (the entity ); and (b) an amount (the undistributed amount ) consisting of the whole or part of the income or capital so distributed to the entity satisfies the following requirements: (i) the amount has not been distributed by the entity; and (ii) an individual, directly or indirectly, and for his or her own benefit, has a fixed entitlement to a share of the amount; the entity is taken to have distributed the share of the undistributed amount to the individual immediately before the end of 2 months after the end of the income year.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-80 — Where individual’s death or breakdown of marriage or relationship

(1) For the purposes of section 269 ‑ 60, if: (a) the trust distributes, directly or indirectly to an individual as mentioned in that section, income or capital that is included in a test year distribution; and (b) a later distribution of income or capital is made that is included in the same or a different test year distribution; and (c) either the individual dies before the later distribution is made or: (i) before it is made, there is a breakdown in the marriage or relationship (see section 272 ‑ 140) of the individual; and (ii) after the breakdown, no distribution of income or capital of the trust, that is included in a test year distribution, is made directly or indirectly to the individual; and (iii) it is reasonable to assume that the breakdown in the marriage or relationship is the reason for no such distribution being made; then subsections (2) and (3) apply. (2) No income or capital distributed to the individual by the trust, directly or indirectly as mentioned in section 269 ‑ 60, is to be included in any test year distribution. (3) If: (a) the requirements of subsection (1) are met because the individual has died; and (b) immediately before his or her death, the individual had directly or indirectly, and for his or her own benefit, a fixed entitlement to a share of the income or capital of the trust; and (c) after the individual’s death, the fixed entitlement is held by a person as trustee of the individual’s estate or by a person who received it as a beneficiary of the estate; no income or capital distributed to the person as such a trustee or beneficiary, directly or indirectly as mentioned in section 269 ‑ 60, is to be included in any test year distribution.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 144 of 2008, Sch 14 item 46, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36)

s 269-85 — Arrangements to pass pattern of distributions test

(1) The trust is taken for the purposes of section 269 ‑ 60 not to have distributed, directly or indirectly to an individual, and for the individual’s own benefit, a share of a test year distribution of income or capital of the trust if the condition in subsection (2) is met. (2) The condition is that an arrangement was entered into where: (a) the arrangement in some way (directly or indirectly) related to, affected or depended for its operation on the share or its value; and (b) the purpose, or one of the purposes, of the arrangement was to ensure that the trust would meet the condition in subsection 267 ‑ 30(2).

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 269-95 — Control a non ‑ fixed trust

Basic meaning (1) Subject to this section, a group (see subsection (5)) controls a non ‑ fixed trust if: (a) the group has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust; or (b) the group is able (directly or indirectly) to control the application of the capital or income of the trust; or (c) the group is capable, under a scheme, of gaining the beneficial enjoyment in paragraph (a) or the control in paragraph (b); or (d) the trustee is accustomed, under an obligation or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the group; or (e) the group is able to remove or appoint the trustee; or (f) the group acquires more than a 50% stake in the income or capital of the trust. Replacement group after death etc. (2) The consequences set out in subsection (3) apply if: (a) a group (the original group ) ceases to control a non ‑ fixed trust only because of the death, incapacitation or breakdown in the marriage or relationship of the individual comprising, or an individual included in, the group; and (b) another group (the replacement group ) begins to control the trust within the following period (whether or not any other group controlled the trust in the interim): (i) one year after the death, incapacitation or breakdown in the marriage or relationship; or (ii) such longer period as the Commissioner determines in relation to the death, incapacitation or breakdown in the marriage or relationship; and (c) the replacement group consists of: (i) if the individual who died or became incapacitated or whose marriage or relationship broke down comprised the original group—one or more individuals who are members of the individual’s family (see section 272 ‑ 95); or (ii) in any other case—one or more such individuals together with all of the persons who were members of the original group, other than any individual who has died or become incapacitated or whose marriage or relationship has broken down; and (d) the replacement group began to control the trust only because of the death, incapacitation or breakdown in the marriage or relationship of the individual; and (e) disregarding any individual who died or became incapacitated or whose marriage or relationship broke down and the one or more individuals covered by paragraph (c)—the beneficiaries of the trust immediately before the original group ceased to control the trust are the beneficiaries of the trust immediately after the replacement group begins to control the trust. Consequences of subsection (2) (3) For the purposes of subsection (2), the consequences are that: (a) the replacement group is taken to have controlled the trust from the time when the original group began to control it until the time when the replacement group actually began to control it; and (b) the original group is taken not to have controlled the trust; and (c) if: (i) a person or persons (other than a replacement group) began to control the trust at some time during the period from the time the original group ceased to control the trust until the replacement group began to do so; and (ii) the person or persons began to control the trust only because of the death, incapacitation or breakdown in the marriage or relationship of the individual; and (iii) the control did not continue after the replacement group began to control the trust; the person or persons are taken not to have controlled the trust. Deemed absence of control (4) If: (a) at a particular time, a group controls a non ‑ fixed trust; and (b) the Commissioner, having regard to: (i) the identity of the beneficiaries of the trust at any time before and at any time after the group began to control the trust; and (ii) all other relevant circumstances; considers that it is reasonable that the group be taken not to control the trust at the particular time; the group is taken not to control the trust at the particular time. Group (5) A group is: (a) a person; or (b) a person and one or more associates; or (c) 2 or more associates of a person.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 144 of 2008, Sch 14 item 47, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36)

s 269-100 — Passing the business continuity test

Basic meaning (1) A listed widely held trust passes the business continuity test during a period (the business continuity test period ) in relation to a time (the test time ) if throughout the business continuity test period it carries on the same business as it carried on immediately before the test time. Relevance of being a trust (2) The mere fact of being a trust does not mean that the trust cannot carry on a business. First exception (3) However, the trust does not pass the business continuity test under this section if, at any time during the business continuity test period, it derives assessable income from: (a) a business of a kind that it did not carry on before the test time; or (b) a transaction of a kind that it had not entered into in the course of its business operations before the test time. Second exception (4) The trust also does not pass the business continuity test under this section if, before the test time, it: (a) began to carry on a business it had not previously carried on; or (b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into; and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the business continuity test period the same business as it carried on immediately before the test time. Third exception (5) So far as the test is applied for the purpose of section 266 ‑ 115 (Listed widely held trust may be required to work out its net income and tax loss in a special way) and section 268 ‑ 20 (Widely held unit trust’s income year to be divided into periods), the trust also does not pass the business continuity test under this section if, at any time during the business continuity test period, it incurs expenditure: (a) in carrying on a business of a kind that it did not carry on before the test time; or (b) as a result of a transaction of a kind that it had not entered into in the course of its business operations before the test time.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 124 of 2013, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22) | Amended by No 7 of 2019, Sch 1 item 14 | Sch 1 item 15 | Sch 1 item 16 | Sch 1 item 17 | Sch 1 item 18 | Sch 1 item 19 | Sch 1 item 20, effective Sch 1 (items 14–32, 164): 1 Apr 2019 (s 2(1) item 1)

s 269-105 — Modified test for income years starting on or after 1 July 2015

Cases in which businesses need only be similar (1) A listed widely held trust also passes the business continuity test during a period (the business continuity test period ) in relation to a time (the test time ) and in relation to: (a) a tax loss for a loss year starting on or after 1 July 2015; or (b) net income for an income year starting on or after 1 July 2015; or (c) a debt, incurred in an income year starting on or after 1 July 2015, that the trust writes off as bad; or (d) a debt, incurred in an income year starting on or after 1 July 2015, in relation to which a debt/equity swap (within the meaning of section 63E) occurs; if throughout the business continuity test period it carries on a business (its current business ) that is similar to the business it carried on immediately before the test time (its former business ). Relevance of being a trust (2) The mere fact of being a trust does not mean that the trust cannot carry on a business. Matters to be considered (3) Without limiting the matters that may be taken into account in ascertaining whether the trust’s current business is similar to its former business, the following must be taken into account: (a) the extent to which the assets (including goodwill) that are used in its current business to generate assessable income throughout the business continuity test period were also used in its former business to generate assessable income; (b) the extent to which the activities and operations from which its current business generated assessable income throughout the business continuity test period were also the activities and operations from which its former business generated assessable income; (c) the identity of its current business and the identity of its former business; (d) the extent to which any changes to its former business result from development or commercialisation of assets, products, processes, services or marketing or organisational methods of the former business. Exception (4) However, the trust does not pass the business continuity test under this section if, before the test time, it: (a) began to carry on a business it had not previously carried on; or (b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into; and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the business continuity test period a business that is similar to the business it carried on immediately before the test time.

Amendment history: Inserted by No 7 of 2019, effective Sch 1 (items 14–32, 164): 1 Apr 2019 (s 2(1) item 1)

s 270-5 — What this Division is about

A trust may be prevented from making any use of deductions, or full use of deductions in an income year, if a scheme to take advantage of the deductions exists.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 270-10 — Schemes to take advantage of deductions

Basic case (1) The consequences set out in section 270 ‑ 15 result if: (a) a deduction is allowable to a trust for the income year; and (b) under a scheme, the following happen (in any order): (i) the trust derives an amount of assessable income (the scheme assessable income ) in the income year; and (ii) an outsider to the trust (see section 270 ‑ 25) directly or indirectly provides a benefit (see section 270 ‑ 20) to the trustee, to a beneficiary in the trust or to an associate of the trustee or of a beneficiary; and Note: The benefit may constitute all or any of the scheme assessable income. (iii) the trustee, a beneficiary in the trust or an associate of the trustee or of a beneficiary, directly or indirectly provides a benefit to the outsider to the trust or to an associate of the outsider (other than an associate covered by any of paragraphs 270 ‑ 25(1)(a) to (f)); and Note: The benefit may constitute all or any of the deduction. (c) it is reasonable to conclude that: (i) the trust derived the scheme assessable income; or (ii) the outsider provided the benefit as mentioned in subparagraph (b)(ii); or (iii) the trustee, beneficiary or associate provided the benefit as mentioned in subparagraph (b)(iii); wholly or partly, but not merely incidentally, because the deduction would be allowable; and (d) the trust is not an excepted trust under paragraph 272 ‑ 100(b), (c) or (d). Special case (2) If: (a) under a scheme, a person who, before the scheme was entered into, was an outsider to a trust becomes: (i) the trustee of the trust; or (ii) a person with a fixed entitlement to a share of the income or capital of the trust; and (b) if the person had not ceased to be an outsider to the trust, the requirements of subsection (1) would have been satisfied in relation to the scheme; the requirements of subsection (1) are taken to have been satisfied in relation to the scheme.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 270 | Sch 2F item 9 | Sch 2F item 25, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 270-15 — Tax consequences of schemes

If the requirements of subsection 270 ‑ 10(1) are satisfied, the consequences are that: (a) to the extent (if any) that the deduction mentioned in paragraph 270 ‑ 10(1)(a) relates exclusively, or may appropriately be related, to the scheme assessable income, the deduction is not allowable; and (b) if the net income of the trust is less than the scheme assessable income or there is no net income—the trust has a net income equal to, or the net income is increased so that it equals, the scheme assessable income; and (c) paragraph (b) and the scheme assessable income are disregarded in working out any tax loss incurred by the trust in the income year; and (d) if paragraph (b) applies and the deduction mentioned in paragraph 270 ‑ 10(1)(a) is for a tax loss—paragraph (b) and the scheme assessable income are disregarded in working out any deduction in respect of the tax loss allowable after the income year.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 270, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 270-20 — Benefit

A benefit is: (a) money, a dividend or property (whether tangible or intangible); or (b) a right or entitlement (whether or not property); or (c) services; or (d) the extinguishment, forgiveness, release or waiver of a debt or other liability; or (e) the doing of anything that results in the derivation of assessable income; or (f) anything that, disregarding the preceding paragraphs, is a benefit or advantage.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 270 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 270-25 — Outsider to trust

Outsider to family trust (1) If the trust mentioned in paragraph 270 ‑ 10(1)(a) is a family trust, an outsider to the trust is a person other than: (a) the trustee of the trust; or (b) a person with a fixed entitlement to a share of the income or capital of the trust; or (c) the individual specified in the trust’s family trust election; or (d) a member of the individual’s family; or (da) a trust with the same individual specified in its family trust election; or (e) a company, partnership or trust that made an interposed entity election to be included in the individual’s family group, where the election was in force (including before it was made) when the scheme mentioned in paragraph 270 ‑ 10(1)(b) commenced; or (f) a fixed trust, company or partnership (an entity ) where, at all times while the scheme mentioned in paragraph 270 ‑ 10(1)(b) was being carried out: (i) the individual specified in the trust’s family trust election; or (ii) one or more members of the individual’s family; or (iii) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or any combination of the above, had fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the entity. Outsider to non ‑ family trust (2) If the trust mentioned in paragraph 270 ‑ 10(1)(a) is not a family trust, an outsider to the trust is a person other than: (a) the trustee of the trust; or (b) a person with a fixed entitlement to a share of the income or capital of the trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 270, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 143 of 2007, Sch 8 item 1, 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 271-5 — What this Division is about

Basically, if: • the trustee of a trust makes a family trust election; or • a company, the partners in a partnership or the trustee of a trust makes an election to be included in a family group in relation to a family trust; and the company, partnership or trust concerned confers a present entitlement to, or distributes, income or capital other than upon or to a specified individual or members of his or her family group, a special tax is payable on the conferral or distribution. If certain persons do not provide information about conferrals of present entitlements or distributions by non ‑ residents connected with them, the persons may become liable to the special tax on their own conferrals or distributions. If certain non ‑ residents do not pay the special tax by the due date, other persons connected with them may also become liable to pay a special tax equal to the unpaid amount.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-10 — Family trust distribution tax

This Division provides for tax to be payable in specified circumstances. The tax is called family trust distribution tax .

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-15 — Tax liability where family trust makes distribution etc. outside family group

(1) This section applies if: (a) a trustee makes a family trust election in relation to a trust; and (b) at any time while the election is in force (including a time before it was made), the trust confers a present entitlement to, or distributes, income or capital of the trust: (i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or (ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution. (2) If this section applies: (a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed; or (b) if the trustee is a company—the trustee, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-20 — Tax liability where interposed trust makes distribution etc. outside family group

(1) This section applies if: (a) the trustee of a trust makes an interposed entity election for the trust to be included in the family group of the individual specified in a family trust election; and (b) at any time while the election is in force (including a time before it was made), the trust confers a present entitlement to, or distributes, income or capital of the trust: (i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or (ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution. (2) If this section applies: (a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed; or (b) if the trustee is a company—the trustee, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-25 — Tax liability where interposed partnership makes distribution etc. outside family group

(1) This section applies if: (a) the partners in a partnership make an interposed entity election for the partnership to be included in the family group of the individual specified in a family trust election; and (b) at any time while the interposed entity election is in force (including a time before it was made), the partnership confers a present entitlement to, or distributes, income or capital: (i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or (ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution. (2) If this section applies, the partners, together with each person who at the time of the conferral or distribution was a director of any partner that was a company, are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-30 — Tax liability where interposed company makes distribution outside family group

(1) This section applies if: (a) a company makes an interposed entity election for the company to be included in the family group of the individual specified in a family trust election; and (b) at any time while the interposed entity election is in force (including a time before it was made), the company confers a present entitlement to, or distributes, income or capital of the company: (i) upon or to a person who is neither the individual specified in the family trust election nor a member of the individual’s family group in relation to the conferral or distribution; or (ii) upon or to the individual specified in the election or a member of the individual’s family group, where the individual or member is the trustee of a trust, or the member is a trust, that is not included in the individual’s family group in relation to the conferral or distribution. (2) If this section applies, the company, together with each person who was a director of the company at the time of the conferral or distribution, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital to which the entitlement relates, or that is distributed.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-35 — Avoidance of double ‑ counting

If, after conferring a present entitlement to income or capital as mentioned in paragraph 271 ‑ 15(1)(b), 271 ‑ 20(1)(b), 271 ‑ 25(1)(b) or 271 ‑ 30(1)(b), the trust, partnership or company concerned distributes the income or capital in satisfaction of the entitlement, the distribution is disregarded for the purposes of that paragraph.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-40 — Exclusion of directors from liability to pay tax

(1) This section applies to a director of a company who is included among persons who are jointly and severally liable to pay family trust distribution tax under section 271 ‑ 15, 271 ‑ 20, 271 ‑ 25 or 271 ‑ 30. Director not taking part in distribution decision (2) If: (a) the director did not take part in any decision to confer the entitlement or make the distribution concerned; and (b) if the director was aware of the proposal to make the decision or of the fact that it was made—the director took reasonable steps to prevent the making, or the implementation, of the decision; the director is not included among the persons jointly and severally liable. Director taking part in distribution decision (3) If: (a) the director took part in any decision to confer the entitlement or make the distribution; and (b) the director voted against, or otherwise disagreed with the decision; and (c) the director took reasonable steps to prevent the implementation of the decision; the director is not included among the persons jointly and severally liable.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-45 — Requirements for section 271 ‑ 55 notice to family trust

Notice about non ‑ resident distributions (1) The Commissioner may give a notice in accordance with section 271 ‑ 55 (which deals with information about distributions etc. by certain non ‑ residents) to the trustee of a trust (the primary entity ) who has made a family trust election, provided the requirements of subsections (2) to (4) of this section are met. First requirement (2) At a time (the test time ) while the election is in force (including a time before it was made), the primary entity must have conferred a present entitlement to, or distributed, income or capital upon or to a company, partnership or trust (the secondary entity ) that at the time was, because of an interposed entity election, a member of the family group of the individual (the primary individual ) specified in the family trust election. Second requirement (3) When the Commissioner gives the notice: (a) if the secondary entity is a partnership—a partner must be a non ‑ resident; and (b) if the secondary entity is a company—the company must be a non ‑ resident; and (c) if the secondary entity is a trust—either: (i) a trustee must be a non ‑ resident; or (ii) the central management and control of the trust must be outside Australia. Third requirement (4) The Commissioner must give the notice before the later of: (a) 5 years after the conferral or distribution mentioned in subsection (2); and (b) the end of the period during which the primary entity is required by section 262A to retain records in relation to the income year in which the conferral or distribution took place.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-50 — Requirements for section 271 ‑ 55 notice to interposed entity

Notice about non ‑ resident distributions (1) If: (a) a company, the trustee of a trust or the partners in a partnership (which company, trust or partnership is the primary entity ) makes an interposed entity election to be included in the family group of an individual specified in a family trust election; and (b) the requirements of subsections (2) to (4) are met; the Commissioner may give the company, trustee or partners a notice in accordance with section 271 ‑ 55 (which deals with information about distributions etc. by certain non ‑ residents). First requirement (2) At a time (the test time ) while the election was in force (including a time before it was made), the primary entity must have conferred a present entitlement to, or distributed, income or capital upon or to a company, partnership or trust (a secondary entity ), where the secondary entity: (a) was the family trust whose trustee made the family trust election; or (b) was, because of an interposed entity election that was in force at the time, included in the family group of the individual (the primary individual ) specified in the family trust election. Second requirement (3) When the Commissioner gives the notice: (a) if the secondary entity is a partnership—a partner must be a non ‑ resident; and (b) if the secondary entity is a company—the company must be a non ‑ resident; and (c) if the secondary entity is a trust—either: (i) a trustee must be a non ‑ resident; or (ii) the central management and control of the trust must be outside Australia. Third requirement (4) The Commissioner must give the notice before the later of: (a) 5 years after the conferral or distribution mentioned in subsection (2); and (b) the end of the period during which the primary entity is required by section 262A to retain records in relation to the income year in which the conferral or distribution took place.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-55 — Notice requiring information about non ‑ resident distributions etc.

Information required (1) The notice that the Commissioner may give the company, partnership or trustee if the requirements of subsections 271 ‑ 45(2) to (4) or 271 ‑ 50(2) to (4) are met must require the company, partners or trustee to give the Commissioner specified information about conferrals of present entitlements to, or distributions of, income or capital since the test time by any company, partnership or trust covered by subsection (2) of this section. Entities covered (2) The following are covered by this subsection: (a) the secondary entity; and (b) any company in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where the company was a non ‑ resident, and the election was in force, when the conferral or distribution took place; and (c) any partnership in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where any of the partners was a non ‑ resident, and the election was in force, when the conferral or distribution took place; and (d) any trust in respect of which a family trust election specifying the primary individual had been made or in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where, when the conferral or distribution took place, either a trustee was a non ‑ resident or the trust’s central management and control were outside Australia. Information not within knowledge (3) The information need not be within the knowledge of the company, partners or trustee at the time the notice is given. Period for giving information (4) The notice must specify a period within which the company, partners or trustee is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice. Company’s liability (5) If the company does not give the information within the period or within such further period as the Commissioner allows, it, together with each person who was a director of the company at the test time, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital mentioned in subsection 271 ‑ 50(2). Partners’ liability (6) If the partners do not give the information within the period or within such further period as the Commissioner allows, they, together with each person who at the test time was a director of any partner that was a company, are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital mentioned in subsection 271 ‑ 50(2). Trustee’s liability (7) If the trustee does not give the information within the period or within such further period as the Commissioner allows: (a) if the trustee is an individual—the trustee is liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital mentioned in subsection 271 ‑ 45(2) or 271 ‑ 50(2); or (b) if the trustee is a company—the trustee, together with each person who was a director of the company at the test time, is jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Primary Liability) Act 1998 , on the amount or value of the income or capital mentioned in subsection 271 ‑ 45(2) or 271 ‑ 50(2).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-60 — Tax liability where non ‑ resident family trust’s tax unpaid

Conditions for tax liability (1) If: (a) tax under section 271 ‑ 15 on the amount or value of income or capital of a family trust becomes due and payable; and (b) the Commissioner determines, in writing, at or after the time when the tax became due and payable, that it is unlikely that the whole or part (the unpaid amount ) of the tax will be paid; and (c) when the Commissioner makes the determination: (i) a trustee of the family trust is a non ‑ resident; or (ii) the central management and control of the family trust is outside Australia; then the consequences set out in subsection (2) result. Tax liability (2) The consequences are: (a) if there is only one person covered by subsection (3)—that person is liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount; and (b) if there are 2 or more persons covered by subsection (3)—those persons are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount. Persons liable under subsection (2) (3) The persons covered by this subsection are: (a) the trustee of any trust to which subsection (4) applies; and (b) if the trustee of any such trust is a company—any person who is a director of the company when the determination is made; and (c) any company to which subsection (5) applies; and (d) any person who is a director of such a company when the determination is made. Trust mentioned in paragraph (3)(a) (4) This subsection applies to a trust if the trust would be: (a) prevented by Division 266 or 267 from deducting a tax loss or amount in respect of a debt; or (b) required by Division 266 or 267 to work out its net income and tax loss under Division 268; in the income year in which the determination is made, or an earlier income year, if the family trust had not been a family trust. Company mentioned in paragraph (3)(c) (5) This subsection applies to a company if, in its return of income for the income year in which the determination is made or an earlier income year: (a) the company deducted an amount in respect of a debt, where it was allowed to do so but, because of former section 63B or 63C, or Subdivision 165 ‑ C, 709 ‑ D or 719 ‑ I of the Income Tax Assessment Act 1997 , it would not have been if the family trust had not been a family trust; or (b) the company deducted a tax loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165 ‑ A of that Act, it would not have been if the family trust had not been a family trust; or (c) the company applied a net capital loss (within the meaning of former Part IIIA of this Act) where it was allowed to do so but, because of former subsection 160ZC(5), it would not have been if the family trust had not been a family trust; or (d) the company applied a net capital loss (within the meaning of the Income Tax Assessment Act 1997 ) where it was allowed to do so but, because of Subdivision 165 ‑ CA of that Act, it would not have been if the family trust had not been a family trust; (e) the company did not calculate its taxable income in accordance with former section 50C of this Act where it was not required to do so but would have been if the family trust had not been a family trust; or (f) the company calculated its taxable income in accordance with former section 50C and took into account an amount, by reason of former subsection 50D(2), in ascertaining the eligible notional loss of the company under former section 50D, where it was required to calculate its taxable income in accordance with former section 50C and entitled to take the amount into account but would not have been so entitled if the family trust had not been a family trust; or (g) the company did not calculate its taxable income and tax loss under Subdivision 165 ‑ B of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust; or (h) the company did not calculate its net capital gain and net capital loss under Subdivision 165 ‑ CB of the Income Tax Assessment Act 1997 where it was not required to do so but would have been if the family trust had not been a family trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 58 of 2000, Sch 10 item 18 | Sch 10 item 19 | Sch 10 item 20 | Sch 10 item 21, effective s 4, Sch 1, Sch 2 (items 1, 4(1)), Sch 3 (item 3), Sch 6 (item 34), Sch 10 (items 1–11, 17(1), (2), 18–30, 38(1), (2)) and Sch 11 (items 1, 11): 31 May 2000 (s 2(1), (2)) Sch 3 (items 1, 2, 4–7) and Sch 6 (item 33): 16 July 1999 (s 2(3)–(6), (12)) Sch 8 (items 1–17, 21): 1 July 1998 (s 2(13)) Sch 8 (item 18): 1 July 1999 (s 2(13)) | Amended by No 162 of 2005, Sch 3 item 15, effective Sch 1, Sch 3 (items 8–15, 33) and Sch 5: 19 Dec 2005 (s 2(1) item 2) Sch 6 (items 14, 15): 1 July 2001 (s 2(1) item 6) | Amended by No 101 of 2006, Sch 2 item 536 | Sch 2 item 537 | Sch 2 item 538 | Sch 2 item 539 | Sch 2 item 540 | Sch 2 item 541 | Sch 2 item 542, 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 271-65 — Tax liability where non ‑ resident interposed entity’s tax unpaid

When section applies (1) This section applies if: (a) a company, the partners in a partnership or the trustee of a trust makes an interposed entity election to be included in the family group of an individual (the primary individual ); and (b) while the interposed entity election is in force, the company, partnership or trust (the primary interposed entity ) confers a present entitlement to, or distributes, income or capital; and (c) family trust distribution tax becomes due and payable on the amount or value of the income or capital. Determination about unpaid tax (2) If: (a) the Commissioner determines, in writing, at or after the time when the tax became due and payable, that it is unlikely that the whole or part (the unpaid amount ) of the tax will be paid; and (b) at the time: (i) if the primary interposed entity is a company—the company is a non ‑ resident; and (ii) if the primary interposed entity is a partnership—a partner is a non ‑ resident; and (iii) if the primary interposed entity is a trust—either a trustee is a non ‑ resident or the central management and control of the trust is outside Australia; then the consequences in subsection (3) result. Consequences (3) The consequences are: (a) if there is only one person covered by subsection (4)—that person is liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount; and (b) if there are 2 or more persons covered by subsection (4)—those persons are jointly and severally liable to pay tax, as imposed by the Family Trust Distribution Tax (Secondary Liability) Act 1998 , on the unpaid amount. Persons covered (4) The persons covered by this subsection are: (a) any company to which subsection (5) applies; and (b) any person who is a director of such a company when the determination is made; and (c) any partner in a partnership to which subsection (5) applies; and (d) if any partner in any such partnership is a company—any person who is a director of the company when the determination is made; and (e) the trustee of any trust to which subsection (5) applies; and (f) if the trustee of any such trust is a company—any person who is a director of the company when the determination is made. Entities making election and distribution etc. (5) This subsection applies to any company, partnership or trust (an entity ), other than the primary interposed entity, meeting the following conditions: (a) the company, the partners in the partnership or the trustee of the trust made: (i) an interposed entity election to be included in the family group of the primary individual; or (ii) a family trust election specifying the primary individual; and (b) while that election and the interposed entity election made in respect of the primary interposed entity were in force, and before the Commissioner made the determination mentioned in paragraph (2)(a), the entity conferred a present entitlement to, or distributed, income or capital upon or to an eligible entity (see subsection (6)). Eligible entities (6) Each of the following is an eligible entity : (a) the primary interposed entity; (b) a company in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where the company was a non ‑ resident, and the election was in force, when the conferral or distribution took place; (c) a partnership in respect of which an interposed entity election had been made to be included in the family group of the primary individual, where any of the partners was a non ‑ resident, and the election was in force, when the conferral or distribution took place; (d) a trust: (i) in respect of which an interposed entity election had been made to be included in the family group of the primary individual; or (ii) in respect of which a family trust election had been made specifying the primary individual; where, when the conferral or distribution took place, the election was in force and either a trustee was a non ‑ resident or the trust’s central management and control were outside Australia.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-70 — Reduction of liability where tax paid

If family trust distribution tax (the secondary tax ) becomes payable under section 271 ‑ 60 or 271 ‑ 65 on an amount of family trust distribution tax (the primary tax ) that the Commissioner determined was unlikely to be paid: (a) if any of the primary tax is later paid—any liability to the secondary tax existing at the time of the payment is reduced by the amount of the payment; and (b) if any of the secondary tax is later paid—any liability to the primary tax existing at the time of the payment is reduced by the amount of the payment.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-75 — Payment of family trust distribution tax

Tax under sections 271 ‑ 15 to 271 ‑ 30 (1) Family trust distribution tax under any of sections 271 ‑ 15 to 271 ‑ 30 is due and payable: (a) in a case where the conferral or distribution on whose amount or value the tax is payable was made before the day on which the election was made—at the end of 21 days after the day on which the election was made; or (b) in any other case—at the end of 21 days after the day on which the conferral or distribution, on whose amount or value the tax is payable, was made; or by the end of such later day as the Commissioner, in special circumstances, allows. Tax under section 271 ‑ 55 (2) Family trust distribution tax under section 271 ‑ 55 is due and payable at the end of 21 days after the end of the period or further period mentioned in subsection (5), (6) or (7), as the case requires, of that section. Tax under section 271 ‑ 60 or 271 ‑ 65 (3) Family trust distribution tax under section 271 ‑ 60 or 271 ‑ 65 is due and payable at the end of 21 days after the day, or the last day, on which the notice mentioned in subsection 271 ‑ 90(2) is given. Debt due (4) Family trust distribution tax, when it becomes due and payable, is a debt due to the Commonwealth and payable to the Commissioner. Application (5) Subsection (4) does not apply in relation to any family trust distribution tax that becomes due and payable on or after 1 July 2000. Note: For provisions about collection and recovery of family trust distribution 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 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 179 of 1999, Sch 18 item 46, 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))

s 271-80 — Late payment of family trust distribution tax

If any of the family trust distribution 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) began at the beginning of the 60th day after the day by which the family trust distribution 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 family trust distribution tax; (ii) general interest charge on any of the family trust distribution tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Repealed and substituted by No 178 of 1999, Sch 1 item 61 | Sch 1 item 62, 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 1037, 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 124 of 2013, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22)

s 271-90 — Notice of liability

Notice for purposes of section 271 ‑ 15 etc. (1) The Commissioner may give a person or persons, by post or otherwise, a notice specifying: (a) the amount of any family trust distribution tax that the Commissioner has ascertained is payable under any of sections 271 ‑ 15 to 271 ‑ 30 and 271 ‑ 55 by the person or persons; and (b) the day on which that tax became or will become due and payable. Notice for purposes of section 271 ‑ 60 or 271 ‑ 65 (2) The Commissioner must give persons, by post or otherwise, a notice specifying the amount of any family trust distribution tax that the Commissioner has ascertained is payable under section 271 ‑ 60 or 271 ‑ 65 by the persons. Effect of notice on liability etc. (3) The liability of a person or persons to family trust distribution tax on the amount or value of a distribution, and (except in the case of a notice under subsection (2)) the due date for payment of the tax, are not dependent on, or in any way affected by, the giving of a notice in respect of the amount. Amendment of notice (4) The Commissioner may at any time amend a notice. An amended notice is a notice for the purposes of this section. Inconsistency between notices (5) 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 (6) 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 17 of 1998, Sch 2F item 271, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-95 — 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 271 ‑ 90(1) or (2) in respect of specified circumstances in which family trust distribution tax may be payable. Compliance with request for subsection 271 ‑ 90(1) notice (2) In the case of a notice under subsection 271 ‑ 90(1), the Commissioner must, subject to subsection (4) of this section, comply with the request if it is lodged with the Commissioner before the end of the 21 days mentioned in subsection 271 ‑ 75(1) or (2), or before the end of such later day as the Commissioner allows. Compliance with request for subsection 271 ‑ 90(2) notice (3) In the case of a notice under subsection 271 ‑ 90(2), the Commissioner must, subject to subsection (4) of this section, comply with the request regardless of when it is lodged. Further information (4) If the Commissioner considers that the notice cannot be given unless the person making the request gives the Commissioner further information about the circumstances in which the family trust distribution tax may be payable, the Commissioner must request the person to give the Commissioner the information. Failure to give information (5) If the person does not give the information, the Commissioner is not required to comply with the request to give the notice.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 271-105 — Amounts subject to family trust distribution tax not assessable

(1) If: (a) family trust distribution tax (the tax payable ) becomes payable under any of sections 271 ‑ 15 to 271 ‑ 30 and 271 ‑ 55 on the amount or value of income or capital of a company, partnership or trust; and (b) a payment (the tax payment amount ) of the whole or part of the tax payable is made, or a reduction (also the tax payment amount ) in the whole or part of the tax payable takes place under paragraph 271 ‑ 70(b); and (c) taking into account any previous application of this subsection, the whole or part of the amount or value of the income or capital is included in the assessable income of the company, partnership or trust or of any other person; the amount included in the assessable income is reduced by the amount worked out using the formula in subsection (2). (2) The formula is: The original assessable amount is so much of the amount or value of the income or capital as, disregarding any previous reductions under this section, is included in the assessable income of the company, partnership or trust or of any other person. (3) The amount of the reduction is not assessable income and is not exempt income.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 8 | Sch 2F item 10 | Sch 2F item 31 | Sch 2F item 33, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 66 of 2003, Sch 3 item 48 | Sch 3 item 118, effective s 4, Sch 1 and Sch 3 (items 1–46, 47, 48, 140(1), (5), (7)): 30 June 2003 (s 2(1) items 1, 2, 4–6, 14) Sch 3 (item 46A): 29 June 2002 (s 2(1) item 5A)

s 272-5 — Fixed entitlement to share of income or capital of a trust

(1) If, under a trust instrument, a beneficiary has a vested and indefeasible interest in a share of income of the trust that the trust derives from time to time, or of the capital of the trust, the beneficiary has a fixed entitlement to that share of the income or capital. Case where interest not defeasible (2) If: (a) a person holds units in a unit trust; and (b) the units are redeemable or further units are able to be issued; and (c) if units in the unit trust are listed for quotation in the official list of an approved stock exchange—the units held by the person will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and (d) if the units are not listed as mentioned in paragraph (c)—the units held by the person will be redeemed, or any further units will be issued, for a price determined on the basis of the net asset value, according to Australian accounting principles, of the unit trust at the time of the redemption or issue; then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the person’s interest, as a unit holder, in the income or capital of the unit trust is defeasible. Deemed fixed entitlement (3) If: (a) a beneficiary with an interest in a share of income that the trust derives from time to time, or of the capital of a trust, does not have a fixed entitlement to the share; and (b) the Commissioner considers that the beneficiary should be treated as having the fixed entitlement, having regard to: (i) the circumstances in which the entitlement is capable of not vesting or the defeasance can happen; and (ii) the likelihood of the entitlement not vesting or the defeasance happening; and (iii) the nature of the trust; the beneficiary has the fixed entitlement.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-10 — Fixed entitlement to share of income or capital of a company

(1) If a shareholder in a company holds shares carrying the right to receive some or all of the dividends that may be paid by the company, the shareholder has a fixed entitlement to a share of the income of the company equal to the percentage of the total dividends represented by the dividends that the shareholder has a right to receive. (2) If a shareholder in a company holds shares carrying the right to receive the whole or part of any distribution of the paid ‑ up share capital of the company in the event of any return of capital to shareholders, the shareholder has a fixed entitlement to a share of the capital of the company equal to the percentage of the total distribution represented by the amount that the shareholder has a right to receive.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 63 of 1998, Sch 7 item 64, 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))

s 272-15 — Fixed entitlement to share of income or capital of a partnership

(1) If, under a partnership agreement: (a) a partner is entitled to a share of income that the partnership derives from time to time, or of the capital of the partnership; and (b) the share is not able to be varied; the partner has a fixed entitlement to that share of the income or capital. Deemed fixed entitlement (2) If: (a) a partner does not have a fixed entitlement to a share of income that the partnership derives from time to time, or of the capital of a partnership, only because the partner’s share of the income or capital is able to be varied; and (b) the Commissioner considers that the partner should be treated as having the fixed entitlement, having regard to: (i) the circumstances in which the share is able to be varied; and (ii) the likelihood of the variation happening; and (iii) the nature of the partnership; the partner has the fixed entitlement.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-20 — Fixed entitlement to share of income or capital held indirectly

A person holds a fixed entitlement to a share of the income or capital of a company, partnership or trust indirectly if the person holds the entitlement indirectly through fixed entitlements to shares of the income or capital, respectively, of interposed companies, partnerships or trusts.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-25 — Special cases of fixed entitlements held directly or indirectly

Coverage of section (1) This section affects references in this Schedule (other than in subparagraph 269 ‑ 75(b)(ii) and section 272 ‑ 30) to a person or individual having, directly or indirectly , a fixed entitlement to a share of the income or capital of a company, partnership or trust (the main entity ) at a particular time (the test time ). Note: This section will not affect a reference to a person or individual having a fixed entitlement where the phrase “directly or indirectly” is not used. Certain interposed government bodies and special companies (2) If at the test time a government body or a special company has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity, subsection (4) or (5) applies. To find out the meaning of government body and special company : see section 272 ‑ 140. Certain interposed funds (3) If: (a) a fund is: (i) a complying superannuation fund or complying approved deposit fund in relation to the income year in which the test time occurs; or (ii) a superannuation fund for foreign residents at the test time; and (b) at the test time the fund has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity; subsection (4) or (5) applies. Note: See subsection 6(1) for the meaning of complying superannuation fund , complying approved deposit fund and superannuation fund for foreign residents . Government bodies, and funds or companies with more than 50 members (4) In the case of a government body, or a fund or company that has more than 50 members: (a) except where paragraph (b) applies—the body, fund or company is treated as if it had the fixed entitlement as an individual and for the individual’s own benefit; and (b) if the reference is in subsection 272 ‑ 105(2)—the fixed entitlement is treated as if it were held instead by more than 20 individuals and for their own benefit. Funds or companies with 50 members or fewer (5) In the case of a fund or company that has 50 members or fewer, the fund or company is treated as if it did not have the entitlement, but the members are treated as if they had the entitlement in equal proportions. Mixed application of subsections (4) and (5) in certain provisions (6) If, apart from this subsection: (a) the following apply: (i) for the purposes of section 266 ‑ 40 or subsection 267 ‑ 40(2), 267 ‑ 70(2), 268 ‑ 10(3), 268 ‑ 15(3) or 268 ‑ 25(4), it is necessary to determine whether individuals had fixed entitlements during a period; and (ii) the consequences in subsection (4) would apply to a fund or company for part of the period and the consequences in subsection (5) would apply for the remainder of the period; or (b) the following apply: (i) for the purposes of subsection 266 ‑ 90(1) or (2), 266 ‑ 125(2), 266 ‑ 165(2) or 268 ‑ 20(3), it is necessary to determine whether individuals had fixed entitlements at 2 times; and (ii) the consequences in subsection (4) would apply to a fund or company at one of the times and the consequences in subsection (5) would apply at the other time; the consequences in subsection (5) instead apply to the fund or company for the whole of the period, or at both of the times, as the case may be. Entities ceasing to be special companies (7) If: (a) subsection (4) or (5) applies in relation to a special company during a period (the special company period ); and (b) the special company period ends when the special company ceases to be a special company without ceasing to exist; and (c) having regard to the matters set out in subsection (8), the Commissioner considers it fair and reasonable to treat one or more of the persons who were members of the special company immediately after it ceased to be a special company as having held the fixed entitlement mentioned in subsection (2) during the whole or part of the special company period; then: (d) subsection (4) or (5) does not apply in relation to the special company during the whole or the part of the special company period; and (e) the one or more persons are, as mentioned in paragraph (c), treated as having the fixed entitlement instead of the company. Matters for the purposes of paragraph (7)(c) (8) For the purposes of paragraph (7)(c), the matters are: (a) the identity of its members before and after the special company ceases to be a special company; and (b) the circumstances in which it ceases to be a special company; and (c) the nature of the rights in the special company held by its members before and after it ceases to be a special company; and (d) any other matter that the Commissioner considers relevant.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 15 of 2007, Sch 1 item 148, 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)

s 272-30 — Additional special cases of fixed entitlements held directly or indirectly

Coverage of section (1) This section also affects references in this Schedule (other than in subparagraph 269 ‑ 75(b)(ii) and section 272 ‑ 25) to a person or individual having, directly or indirectly , a fixed entitlement to a share of the income or capital of a company, partnership or trust (the main entity ) at a particular time (the test time ). Note: This section will not affect a reference to a person or individual having a fixed entitlement where the phrase “directly or indirectly” is not used. Interposed family trusts (2) If at the test time a family trust has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity, it is treated as if it had the fixed entitlement as an individual and for the individual’s own benefit. Interposed listed public companies and widely held unit trusts (3) If: (a) at the test time a listed public company or widely held unit trust has, directly or indirectly, a fixed entitlement to a share of the income or capital of the main entity; and To find out the meaning of listed public company : see section 272 ‑ 135. (b) having regard to the matters set out in subsection (4), the Commissioner considers it fair and reasonable to treat the company or trust as holding, at the test time, the whole or part of its fixed entitlement as an individual and for the individual’s own benefit; the company or trust is treated as so holding the whole or the part of its fixed entitlement. Matters for the purposes of paragraph (3)(b) (4) For the purposes of paragraph (3)(b), the matters are: (a) the practicability of identifying any individuals who at the test time have fixed entitlements to a share of the income or capital of the main entity indirectly through the company or trust and for their own benefit; and (b) any change before or after the test time in the individuals who can be identified as having fixed entitlements of the kind mentioned in paragraph (a); and (c) any other matter that the Commissioner considers relevant.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 271 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-35 — Arrangements to pass fixed entitlement tests

(1) If the operation of a provision of this Schedule depends on or is in any way affected by an individual having a fixed entitlement directly or indirectly, and for the individual’s own benefit, to a share of the income or capital of a company, partnership or trust, an individual who would otherwise have that fixed entitlement is taken not to have it for the purposes of the operation of the provision if the condition in subsection (2) is met. (2) The condition is that an arrangement was entered into where: (a) the arrangement in some way (directly or indirectly) related to, affected or depended for its operation on the fixed entitlement or its value; and (b) the purpose, or one of the purposes, of the arrangement was to ensure that, for the purposes of the operation of the provision, the individual would have the fixed entitlement.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-40 — Continued holding of fixed entitlement where death occurs

If, immediately before an individual dies, he or she has a fixed entitlement to a share of the income or capital of a trust, partnership or company directly or indirectly, and for his or her own benefit, the individual is taken to continue to have the entitlement for so long as: (a) it is held by someone as trustee of the individual’s estate; or (b) it is held by someone who received it as a beneficiary of the estate.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-45 — Trust distribution to beneficiary

A trust distributes income or capital of the trust to a person if it: (a) pays or credits the income or capital in the form of money to the person; or (b) transfers the income or capital in the form of property to the person; or (c) reinvests or otherwise deals with the income or capital on behalf of the person or in accordance with the directions of the person; or (d) applies the income or capital for the benefit of the person; in the person’s capacity as a beneficiary of the trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-50 — Company distribution to shareholder

Distribution of income (1) A company distributes income of the company to a person if the company pays a dividend or non ‑ share dividend to the person. Distribution of capital (2) A company distributes capital of the company to a person if: (a) it pays or credits money, or transfers property, of the company to the person, where the amount paid or credited, or the amount or value of the property, is debited against an amount standing to the credit of the share capital account of the company; and (b) the payment, crediting or transfer is not the payment of a dividend. (3) A company distributes capital of the company to a person if the company makes a non ‑ share capital return to the person.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 63 of 1998, Sch 7 item 65, 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 163 of 2001, Sch 1 item 115 | Sch 1 item 116, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2)

s 272-55 — Partnership distribution to partner

A partnership distributes income or capital of the partnership to a person if it: (a) pays or credits the income or capital in the form of money to the person; or (b) transfers the income or capital in the form of property to the person; or (c) reinvests or otherwise deals with the income or capital on behalf of the person or in accordance with the directions of the person; or (d) applies the income or capital for the benefit of the person; in the person’s capacity as a partner in the partnership.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-60 — Other distributions of income and capital

(1) A company, partnership or trust (an entity ) also distributes income or capital to a person in circumstances not covered by section 272 ‑ 45, 272 ‑ 50 or 272 ‑ 55 if it: (a) pays (including by way of a loan) or credits money of the entity to the person, or reinvests such money for the person; or (b) transfers property of the entity to, or allows use of property of the entity by, the person; or (c) deals with money or property of the entity for or on behalf of the person or as the person directs; or (d) applies money or property of the entity for the benefit of the person; or (e) extinguishes, forgives, releases or waives a debt or other liability owed by the person to the entity. Limit on distributions (2) However, subsection (1) only applies if, and to the extent that: (a) the amount paid, credited, reinvested or applied, the value of the property transferred, or the value of the other thing done; exceeds: (b) the amount or value of any consideration given in return. Character of distributions (3) Each thing that is a distribution because of subsection (1) is a distribution of income unless it is clear that the money or property concerned was capital, or that the debt or liability was attributable to capital, of the entity.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 17, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-63 — Distribute indirectly

A trust distributes income or capital indirectly to an individual if it distributes the income or capital to a company, partnership or trust (the first interposed entity ) interposed between the trust and the individual and: (a) the first interposed entity distributes to the individual an amount or property attributable to the income or capital; or (b) another company, partnership or trust (the final interposed entity ) distributes to the individual an amount or property that is attributable to the income or capital as a result of: (i) the distribution of an amount or property attributable to the income or capital to the final interposed entity by the first interposed entity; or (ii) successive distributions of amounts or property attributable to the income or capital to and by any companies, partnerships or trusts interposed between the first interposed entity and the final interposed entity.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-65 — Fixed trust

A trust is a fixed trust if persons have fixed entitlements to all of the income and capital of the trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-70 — Non ‑ fixed trust

A trust is a non ‑ fixed trust if it is not a fixed trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 267 | Sch 2F item 272 | Sch 2F item 22 | Sch 2F item 22A, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-75 — Family trust

A trust is a family trust at any time when a family trust election (see subsection 272 ‑ 80(1)) in respect of the trust is in force.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-80 — Family trust election

Nature of election (1) Subject to this section, the trustee of the trust may make an election (the family trust election ) in accordance with this section that the trust is a family trust for the purposes of this Schedule at all times after the beginning of a specified income year. How election made (2) The election must be in writing and in the approved form. Election to specify individual and certain information (3) The election must also specify an individual as the individual whose family group is to be taken into account in relation to the election, and must contain such other information as the Commissioner requires. Trust must pass family control test (4) If the trust does not pass the family control test (see section 272 ‑ 87) at the end of the specified income year, the trustee must not make the election. Earlier year may be the specified year (4A) The specified income year may be a year before the one in which the election is made if: (a) at all times in the period from the beginning of the specified income year until 30 June in the income year before the one during which the election is made, the trust passes the family control test (see section 272 ‑ 87); and (b) either: (i) any conferrals of present entitlement to income or capital of the trust made by the trustee during that period have been made on; or (ii) any distributions of income or capital of the trust made by the trustee during that period have been made to; the individual specified in the election or members of that individual’s family group. Election generally cannot be varied or revoked (5) Subject to subsections (5A), (5B), (5C), (6) and (6A), the election cannot be varied or revoked. Variation cases (5A) The trustee of a trust may, in respect of an income year during the period specified in subsection (6B), vary an election so that a different individual (the new individual ) is specified for the purposes of subsection (3) as the individual whose family group is to be taken into account in relation to the election if: (a) the new individual was a member of the family of the individual originally specified in the election at the election commencement time; and (b) any conferrals of present entitlement to income or capital of: (i) the trust; and (ii) an entity for which an interposed entity election has been made in relation to the trust; during the period in which the election has been in force have been made on the new individual or on persons who would have been members of the new individual’s family group at the time of the conferral; and (c) any distributions of income or capital of: (i) the trust; and (ii) an entity for which an interposed entity election has been made in relation to the trust; during the period in which the election has been in force have been made to the new individual or to persons who would have been members of the new individual’s family group at the time of the distribution. (5B) A variation of an election under subsection (5A) in relation to a trust can only be made once. (5C) The trustee of a trust may vary an election so that a different individual (the new individual ) is specified for the purposes of subsection (3) as the individual whose family group is to be taken into account in relation to the election if: (a) an order; or (b) an agreement; or (c) an award; of a kind mentioned in paragraphs 126 ‑ 5(1)(a) to (f) of the Income Tax Assessment Act 1997 results in the new individual, or a group comprising the new individual and members of the new individual’s family, having control of the trust under subsection (5D). (5D) The new individual, or a group comprising the new individual and members of the new individual’s family, have control of the trust for the purposes of subsection (5C) if any of paragraphs 272 ‑ 87(2)(a) to (g) are satisfied in relation to a group consisting of: (a) the new individual; or (b) the new individual and members of the new individual’s family. Revocation cases (6) The trustee of a fixed trust may revoke the election if: (a) at the beginning of the specified income year: (i) the individual specified in the election; or (ii) one or more members of the individual’s family; or (iii) the trustee of another trust that is a family trust, provided the individual is specified in that trust’s family trust election; or any combination of the above, had the fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the trust; and (b) at a later time (whether before or after the return is furnished, but while the trust is still a fixed trust), an individual, other than one of a kind mentioned in subparagraph (a)(i), (ii) or (iii), holds a fixed entitlement, directly or indirectly, and for his or her own benefit, to any of the income or capital of the trust. (6A) The trustee of a trust may, in respect of an income year during the period specified in subsection (6B), revoke the election unless: (a) the trust, or another entity, has incurred a tax loss and had its assessable income reduced by part or all of the loss in an income year or years during the period: (i) beginning at the beginning of the income year specified in the election; and (ii) finishing at the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8)); and the trust, or the other entity, could not have had its assessable income so reduced had the election not been in force; or (b) the trust, or another entity, has claimed a deduction for bad debts in an income year or years during the period specified in paragraph (a) and the trust, or the other entity, could not have claimed the deduction had the election not been in force; or (c) a beneficiary of the trust in an income year during the period specified in paragraph (a) received a franked distribution indirectly through the trust and paragraph 207 ‑ 150(1)(a) of the Income Tax Assessment Act 1997 would have applied in relation to the distribution had the election not been in force. Period to vary or revoke the election (6B) The trustee of a trust cannot vary or revoke the election under subsections (5A) or (6A) unless the variation or revocation is in respect of an income year that occurs during the period: (a) beginning at the beginning of the income year specified in the election and finishing at the end of the fourth income year after the income year specified in the election; or (b) beginning at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year. How to vary or revoke the election (7) To revoke an election under subsection (6), the revocation must be made in the trust’s return of income for the income year in which the later time occurs. If the trustee is not required to give a return for the income year, the revocation must: (a) be in writing and in the approved form; and (b) specify the later time; and (c) be given to the Commissioner before the end of: (i) 2 months after the end of the income year in which the later time occurs; or (ii) such later day as the Commissioner allows. (8) To vary or revoke an election under subsection (5A), (5C) or (6A), the variation or revocation must be made in the trust’s return of income for the income year from which the variation or revocation is to be effective. If the trustee is not required to give a return for the income year, the variation or revocation must: (a) be in writing and in the approved form; and (b) specify the income year from which the variation or revocation is to be effective; and (c) be given to the Commissioner on or before: (i) 2 months after the end of that income year; or (ii) such later day as the Commissioner allows. When election is in force (9) The election is in force: (a) if it is not revoked—at all times after the election commencement time (see subsection (10)); or (b) if it is revoked under subsection (6)—at all times from the election commencement time until the later time specified in the revocation; or (c) if it is revoked under subsection (6A)—at all times from the election commencement time until the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8)). Election commencement time (10) The election commencement time is: (a) if the trust does not pass the family control test (see section 272 ‑ 87) at all times in the income year specified—the earliest time from which the trust does pass the family control test for the remainder of that income year; or (b) in any other case—the beginning of the income year specified. Only one election (11) The trustee must not make more than one election under this section in relation to the trust.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272 | Sch 2F item 22 | Sch 2F item 22A, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 41 of 2005, Sch 8 item 1 | Sch 8 item 2, 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 143 of 2007, Sch 8 item 2 | Sch 8 item 3 | Sch 8 item 5 | Sch 8 item 6 | Sch 8 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 124 of 2013, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22)

s 272-85 — Interposed entity election

Nature of election (1) Subject to this section, if the trustee makes a family trust election, a company, the partners in any partnership or the trustee of any other trust may make an election (an interposed entity election ) in accordance with this section that the company, partnership or trust is to be included, at all times after a specified day in a specified income year, in the family group of the individual specified in the family trust election. How election made (2) The election must be in writing and in the approved form. Election to contain information (3) The election must contain such information as the Commissioner requires. Family control test must be passed (4) The company, partnership or trust must pass the family control test (see section 272 ‑ 87) at the end of the income year. Earlier year may be the specified year (4A) The specified income year may be a year before the one in which the election is made if: (a) at all times in the period from the beginning of the specified income year until 30 June in the income year before the one during which the election is made, the company, partnership or trust passes the family control test (see section 272 ‑ 87); and (b) either: (i) any conferrals of present entitlement to income or capital of the trust made by the trustee during that period have been made on; or (ii) any distributions of income or capital of the trust made by the trustee during that period have been made to; the individual specified in the family trust election or members of that individual’s family group. Election generally cannot be revoked (5) Subject to subsections (5A) and (5B), the election cannot be revoked. Revocation cases (5A) A company, the partners in any partnership or the trustee of a trust may, in respect of an income year during the period specified in subsection (5C), revoke the election if at the election commencement time, or at a later time, the entity was, or becomes, a member of the family group (within the meaning of subsection 272 ‑ 90(3A) or (5)) of the individual specified in the family trust election. (5B) The election is taken to be revoked if the family trust election to which it relates is revoked. Period to revoke the election (5C) A company, the partners in any partnership or the trustee of a trust cannot revoke an election under subsection (5A) unless the revocation is in respect of an income year that occurs during the period: (a) beginning at the later of: (i) the beginning of the income year specified in the election; and (ii) the beginning of the income year in which the entity became a member of the family group; and finishing at the end of the fourth income year after the income year referred to in subparagraph (i) or (ii); or (b) beginning at the beginning of the income year in which Schedule 8 to the Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year. How revocation is made (6) A revocation must be made in the entity’s return of income for the income year from which the revocation is to be effective. If the entity is not required to give a return for the income year, the revocation must: (a) be in writing and in the approved form; and (b) specify the income year from which the revocation is to be effective; and (c) be given to the Commissioner on or before: (i) 2 months after the end of that income year; or (ii) such later day as the Commissioner allows. When election is in force (6A) The election is in force: (a) if it is not revoked—at all times after the election commencement time (see subsection (6B)); or (b) if it is revoked under subsection (5A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (6)); or (c) if the family trust election to which it relates is revoked under subsection 272 ‑ 80(6)—at all times from the election commencement time until the later time specified in that revocation; or (d) if the family trust election to which it relates is revoked under subsection 272 ‑ 80(6A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the family trust revocation is to be effective (see subsection 272 ‑ 80(8)). Election commencement time (6B) The election commencement time is: (a) if the company, partnership or trust does not pass the family control test at all times in the specified income year—the later of: (i) the beginning of the specified day; and (ii) the earliest time from which the company, partnership or trust does pass the family control test for the remainder of the specified income year; or (b) in any other case—the beginning of the specified day. Restriction on multiple elections (7) The company, partners or trustee must not make an election under this section that the company, partnership or trust is to be included in the family group of the individual specified in the family trust election in respect of more than one trust, unless the individual specified in each of the family trust elections is the same. (8) For the purposes of subsection (7) disregard an election that has been revoked under subsection (5A) or (5B).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272 | Sch 2F item 23 | Sch 2F item 23A, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 41 of 2005, Sch 8 item 3 | Sch 8 item 4, 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 143 of 2007, Sch 4 item 13 | Sch 8 item 5 | Sch 8 item 7, 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 124 of 2013, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22)

s 272-87 — Passing the family control test

Trusts (1) A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if: (a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of: (i) the individual (the primary individual ) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or (ii) one or more members of the primary individual’s family (see section 272 ‑ 95); or (iii) the primary individual and one or more members of the primary individual’s family; or (b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual’s family; or (c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of: (i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or (ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii). Requirement for purposes of subsection (1) (2) The requirement for the purposes of subsection (1) is that: (a) the group has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the trust; or (b) the group is able (directly or indirectly) to control the application of the capital or income of the trust; or (c) the group is capable, under a scheme, of gaining the beneficial enjoyment in paragraph (a) or the control in paragraph (b); or (d) the trustee of the trust is accustomed, under an obligation or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the group; or (e) the group is able to remove or appoint the trustee of the trust; or (f) the group has more than a 50% stake in the income or capital of the trust; or (g) persons in the group are the only persons who, under the terms of the trust, can obtain the beneficial enjoyment of the income and capital of the trust. Companies and partnerships (3) A company or partnership in respect of which an interposed entity election is proposed to be made passes the family control test if a group consisting of: (a) the individual who is specified in the family trust election mentioned in subsection 272 ‑ 85(1) in relation to the interposed entity election; or (b) one or more members of the individual’s family (see section 272 ‑ 95); or (c) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or (d) any persons covered by any combination of the above paragraphs; have (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income or a greater than 50% share of the capital of the company or partnership.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272 | Sch 2F item 22 | Sch 2F item 22A | Sch 2F item 23 | Sch 2F item 23A, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 93 of 1999, Sch 4 item 24, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 21 of 2015, Sch 7 item 12, effective Sch 2 (items 36, 44–46): 1 May 2015 (s 2(1) item 3) Sch 6 (items 3–15, 73): 19 Mar 2015 (s 2(1) item 7) Sch 6 (items 38–50, 74–79): never commenced (s 2(1) item 12) Sch 7 (items 9–12): 20 Mar 2015 (s 2(1) item 15)

s 272-90 — Family group

(1) This section states whether a person is a member of the family group of the individual (the primary individual ) specified in the family trust election in relation to a conferral of a present entitlement to, or a distribution of, income or capital of a company, partnership or trust, upon or to the person. Family member (2) A member of the primary individual’s family (see section 272 ‑ 95) is a member of the primary individual’s family group in relation to the conferral or distribution. Certain former family members (2A) The following persons are members of the primary individual’s family group in relation to the conferral or distribution: (a) a person who was a spouse of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage or relationship; and (b) a person: (i) who was the spouse of either the primary individual or of a member of the primary individual’s family immediately before the death of the primary individual or member of the primary individual’s family; and (ii) who is now the spouse of a person who is not a member of the primary individual’s family; and (c) a person who was a child of the spouse of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage or relationship of the primary individual or the member of the primary individual’s family. Note: The fact that a person is a member of the family group of an individual under this subsection does not mean that the person is a member of the individual’s family under section 272 ‑ 95. Trust covered by family trust election (3) The trust in respect of which the family trust election was made is a member of the primary individual’s family group in relation to the conferral or distribution. Trust with same primary individual (3A) A trust with the same primary individual specified in its family trust election is a member of the primary individual’s family group in relation to the conferral or distribution. Entity covered by interposed entity election (4) A company, partnership or trust is a member of the primary individual’s family group in relation to the conferral or distribution if: (a) the company, partners or trustee has made an interposed entity election to that effect; and (b) the election is in force when the conferral takes place or the distribution is made. Entity owned by family (5) A company, partnership or trust is a member of the primary individual’s family group in relation to the conferral or distribution if, when the conferral takes place or the distribution is made: (a) the primary individual; or (b) one or more members of the primary individual’s family; or (c) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or any combination of the above, have fixed entitlements directly or indirectly, and for their own benefit, to all of the income and capital of the company, partnership or trust. Funds (6) A fund, authority or institution in Australia that is mentioned in item 1 or 2 of the table in section 30 ‑ 15 of the Income Tax Assessment Act 1997 is a member of the primary individual’s family group in relation to the conferral or distribution if, assuming that a deduction were allowable under Division 30 of that Act in respect of the conferral or distribution, section 78A of this Act would not prevent any of the deduction being allowable. Certain tax exempt bodies (7) An institution, hospital, trustee, society, association, club, or fund, all of whose income is exempt under: (a) section 50 ‑ 5 or 50 ‑ 10 of the Income Tax Assessment Act 1997 ; or (b) item 6.1 or 6.2 of the table in section 50 ‑ 30, or item 9.1 or 9.2 of the table in section 50 ‑ 45, of the Income Tax Assessment Act 1997 ; is a member of the primary individual’s family group in relation to the conferral or distribution if, assuming that a deduction were allowable under Division 30 of that Act in respect of the conferral or distribution, section 78A of this Act would not prevent any of the deduction being allowable. Institutions etc. where no living beneficiaries (8) Either: (a) an institution all of whose income is exempt under item 1.1, 1.3 or 1.4 of the table in section 50 ‑ 5 of the Income Tax Assessment Act 1997 ; or (b) a fund, authority or institution in Australia that is mentioned in item 1 or 2 of the table in section 30 ‑ 15 of the Income Tax Assessment Act 1997 ; is a member of the primary individual’s family group in relation to the conferral or distribution if, when the conferral takes place or the distribution is made, all of the beneficiaries of the trust, in respect of which the family trust election was made, who were individuals have died. Estate of deceased family (9) If the primary individual and all of the members of his or her family are dead when the conferral takes place or the distribution is made, the estates of the individual and of the members are members of the primary individual’s family group in relation to the conferral or distribution.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 63 of 1998, Sch 7 item 66, 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 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 4, effective Sch 1 (items 1–4, 23), Sch 2 and Sch 5: 26 June 2005 (s 2(1) items 2, 4) | Amended by No 101 of 2006, Sch 2 item 544 | Sch 2 item 545, 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 13 | Sch 8 item 6 | Sch 8 item 8 | Sch 8 item 9 | Sch 8 item 272, 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 144 of 2008, Sch 14 item 51 | Sch 14 item 52 | Sch 14 item 53 | Sch 14 item 54, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36) | Amended by No 169 of 2012, Sch 2 item 27, effective Sch 2 (items 1–3, 26, 27): 3 Dec 2012 (s 2(1) item 3) | Amended by No 96 of 2013, Sch 1 item 22, effective Sch 1 (items 19–22): 1 Jan 2014 (s 2(1) item 2) | Amended by No 23 of 2018, Sch 1 item 11, effective Sch 1 (items 10, 11, 19, 57–59): 1 Apr 2018 (s 2(1) items 3, 8) Sch 1 (items 75–79): 30 Mar 2018 (s 2(1) item 9)

s 272-95 — Family

(1) The family of an individual (the test individual ) consists of the test individual and all of the following (if applicable): (a) any parent, grandparent, brother or sister of the test individual or the test individual’s spouse; (b) any nephew, niece or child of the test individual or the test individual’s spouse; (c) any lineal descendant of a nephew, niece or child referred to in paragraph (b); (d) the spouse of the test individual or of anyone who is a member of the test individual’s family because of paragraphs (a), (b) and (c). Note 1: Child , parent and spouse are defined in subsection 6(1). Note 2: Section 960 ‑ 255 may be relevant to determining relationships for the purposes of paragraph (1)(a). (2) A person does not cease to be a family member merely because of the death of any other family member. (3) In this section, an adopted child, step ‑ child or ex ‑ nuptial child of a person is taken to be a lineal descendant of that person for the purposes of determining the lineal descendants of that person or any other person. Note: A person who is no longer a member of an individual’s family under this section may still be a member of the individual’s family group under subsection 272 ‑ 90(2A).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 269 | Sch 2F item 272 | Sch 2F item 14 | Sch 2F item 15 | Sch 2F item 19 | Sch 2F item 26, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Repealed and substituted by No 143 of 2007, Sch 8 item 8 | Sch 8 item 10, 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 144 of 2008, Sch 14 item 55, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36)

s 272-100 — Excepted trust

A trust is an excepted trust at a particular time if: (a) it is a family trust at the particular time; or (b) it is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust in relation to the income year in which the particular time occurs; or (c) it is the trust of a deceased estate, where the particular time occurs during the period from the death of the individual until the end of the year of income in which the 5th anniversary of the death occurs; or (d) at the particular time it is a fixed trust that is a unit trust, and exempt entities have fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the trust; or (f) it is a designated infrastructure project entity at the particular time.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 267 | Sch 2F item 270 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 78 of 2007, Sch 7 item 1, effective s 4, Sch 3 (items 1–20), Sch 7 (items 1, 15) and Sch 8 (items 86–95): 21 June 2007 (s 2(1) items 1–3, 5, 6) | Amended by No 45 of 2008, Sch 1 item 7, 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 124 of 2013, Sch 2 item 1, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22) | Amended by No 70 of 2015, Sch 1 item 64, 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)

s 272-105 — Widely held unit trust

Basic meaning (1) A trust is a widely held unit trust if: (a) it is a fixed trust that is a unit trust; and (b) it is not closely held (see subsection (2)). A trust is also a widely held unit trust if it is an AMIT (including an AMIT arising from the operation of section 276 ‑ 20 (Trust with classes of interests—each class treated as separate AMIT)). Closely held—income test (2) A trust is closely held if: (a) an individual has, or up to 20 individuals have between them; or (b) no individual has, or no individuals have between them; directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the income of the trust. Closely held—capital test (2A) A trust is also closely held if: (a) an individual has, or up to 20 individuals have between them; or (b) no individual has, or no individuals have between them; directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the capital of the trust. Single individual (3) For the purposes of subsection (2) or (2A), all of the following are taken to be a single individual: (a) an individual, whether or not the individual holds units in the unit trust; and (b) the individual’s relatives; and (c) in relation to any units in respect of which other individuals are nominees of the individual or of the individual’s relatives—those other individuals. Exception (4) A unit trust is not a widely held unit trust if, because of: (a) any provision in the trust instrument, or in any contract, agreement or instrument: (i) authorising the variation or abrogation of rights attaching to any of the units; or (ii) relating to the conversion, cancellation, extinguishment or redemption of any of the units; or (b) any contract, agreement, arrangement, option or instrument under which a person has power to acquire any of the units; or (c) any power, authority or discretion in a person in relation to the rights attaching to any of the units; it is reasonable to conclude that the rights attaching to any of the units are capable of being varied or abrogated in such a way (even if they are not in fact varied or abrogated in that way) that directly or indirectly the requirement in paragraph (1)(b) would not be satisfied.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 53 of 2016, Sch 6 item 20, 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 272-110 — Unlisted widely held trust

Subject to Subdivision 272 ‑ J, a unit trust is an unlisted widely held trust if it is a widely held unit trust whose units are not listed for quotation in the official list of an approved stock exchange.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-115 — Listed widely held trust

A unit trust is a listed widely held trust if it is a widely held unit trust whose units are listed for quotation in the official list of an approved stock exchange.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-120 — Unlisted very widely held trust

(1) Subject to Subdivision 272 ‑ J, a unit trust is an unlisted very widely held trust if: (a) it is an unlisted widely held trust; and (b) it has at least 1,000 unit holders; and (c) all of its units carry the same rights; and (d) if its units are redeemable, they are redeemable for a price determined on the basis of its net asset value, according to Australian accounting principles; and (e) it engages only in qualifying activities (see subsection (2)). Qualifying activity (2) A qualifying activity is an activity that: (a) is an investment or business activity; and (b) is conducted in accordance with the trust instrument or deed, and any prospectus, of the trust; and (c) is conducted at arm’s length. Extended status (3) If: (a) at a particular time (the first qualifying time ), a trust for the first time becomes an unlisted very widely held trust; and (b) at a time (the first unit issue time ) that is not more than 2 years earlier, units in the trust were first issued; and (c) at no time during the period (the start ‑ up period ) between the first unit issue time and the first qualifying time was there any abnormal trading, of a kind covered by subsection 269 ‑ 15(1) or section 269 ‑ 20, in the trust’s units; and (d) at all times in the part (if any) of the start ‑ up period that occurred more than 90 days after it began, the trust was a widely held unit trust; the trust is taken to have been an unlisted very widely held trust at all times from the formation of the trust until the end of the start ‑ up period.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-125 — Wholesale widely held trust

(1) Subject to Subdivision 272 ‑ J, a unit trust is a wholesale widely held trust at a particular time (the test time ) if: (a) it is an unlisted widely held trust at the test time; and (b) it is not an unlisted very widely held trust at the test time; and (c) at least 75% of its units are held at the test time by one or more qualifying holders (see subsection (2)); and (d) at the test time, all of its units carry the same rights; and (e) if at the test time its units are redeemable, they are redeemable for a price determined on the basis of its net asset value, according to Australian accounting principles; and (f) the amount subscribed for units in the trust by each person to whom units have been issued was at least $500,000; and (g) at the test time, the unit trust engages only in qualifying activities (see subsection (3)). Qualifying holder (2) Each of the following is a qualifying holder : (a) a listed widely held trust; (b) an unlisted very widely held trust; (c) a life assurance company; (e) a fund that is a complying approved deposit fund in relation to the year of income in which the test time occurs; (f) a fund that is a complying superannuation fund in relation to the year of income in which the test time occurs; (g) a trust that is a pooled superannuation trust in relation to the year of income in which the test time occurs. Qualifying activity (3) A qualifying activity is an activity that: (a) is an investment or business activity; and (b) is conducted in accordance with the trust instrument or deed, and any prospectus, of the trust; and (c) is conducted at arm’s length.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 266 | Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | 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)

s 272-127 — Kind of trust can be affected by ownership by higher level trust

(1) If: (a) apart from this Subdivision, a trust is an unlisted widely held trust, an unlisted very widely held trust or a wholesale widely held trust; and (b) each of one or more trusts of a higher level (see subsection (3)) has, directly or indirectly, fixed entitlements to all of the income and capital of the trust; the trust is instead a trust of the same kind (see subsection (2)) as the trust of the highest level. (2) For the purposes of this Subdivision, trusts are of the following kinds: (a) unlisted widely held trust; (b) unlisted very widely held trust; (c) wholesale widely held trust; (d) listed widely held trust. (3) The kinds of trust are allocated levels in the following order (from lowest to highest): unlisted widely held trust, unlisted very widely held trust, wholesale widely held trust and listed widely held trust.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-130 — Trusts beginning or ceasing to exist

If: (a) under any provision of this Schedule, a trust is required to meet a condition at one or more times or at all times during a period; and (b) the trust does not exist during a part of the period; the period does not include that part.

Amendment history: Inserted by No 17 of 1998, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-135 — Listed public company

Basic meaning (1) A listed public company is a company whose shares (except those that carry a right to a fixed rate of dividend) are listed for quotation in the official list of an approved stock exchange. Exceptions (2) However, a company is not a listed public company if: (a) a person (who is not a company) controls, or is able to control, or up to 20 persons (none of them companies) between them control, or are able to control, 75% or more of the voting power in the company (whether directly, or indirectly through one or more interposed companies, partnerships or trusts); or (b) a person (who is not a company) has, or up to 20 persons (none of them companies) have between them, the right to receive for their own benefit (whether directly, or indirectly through one or more interposed companies, partnerships or trusts) 75% or more of any dividends that the company may pay; or (c) a person (who is not a company) has, or up to 20 persons (none of them companies) have between them, the right to receive for their own benefit (whether directly, or indirectly through one or more interposed companies, partnerships or trusts) 75% or more of any distribution of capital of the company. Meaning of right to receive dividends or distribution of capital indirectly (3) For the purposes of subsection (2), persons have the right to receive dividends or a distribution of capital of a company indirectly for their own benefit if they would receive the dividends or capital for their own benefit if: (a) the company were to pay the dividends or distribute the capital; and (b) the dividends or capital were then successively paid or distributed by each company, partnership or trust interposed between the company and those persons. Meaning of distribute (4) Section 272 ‑ 50 is disregarded in determining the meaning of distribute in paragraphs (3)(a) and (b).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 272, effective s 4 and Sch 1: 16 Apr 1998 (s 2)

s 272-140 — Definitions

(1) In this Schedule: abnormal trading has the meaning given by Subdivision 269 ‑ B. arrangement means any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings. associate has the same meaning as in section 318. benefit , in Division 270, has the meaning given by section 270 ‑ 20. breakdown in the marriage or relationship of an individual: this occurs if the individual is living with another individual on a genuine domestic basis in a relationship as a couple (whether the individuals are the same sex or different sexes and whether legally married or not) and ceases to do so. complying approved deposit fund means a complying approved deposit fund within the meaning of section 47 of the Superannuation Industry (Supervision) Act 1993 . complying superannuation fund means a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 . control a non ‑ fixed trust has the meaning given by Subdivision 269 ‑ E. designated infrastructure project entity has the meaning given by the Income Tax Assessment Act 1997 . directly or indirectly has a meaning affected by sections 272 ‑ 25 and 272 ‑ 30. distribute income or capital has a meaning affected by sections 272 ‑ 45, 272 ‑ 50, 272 ‑ 55 and 272 ‑ 60. excepted trust has the meaning given by section 272 ‑ 100. family has the meaning given by section 272 ‑ 95. family group has the meaning given by section 272 ‑ 90. family trust has the meaning given by section 272 ‑ 75. family trust distribution tax has the meaning given by section 271 ‑ 10. family trust election has the meaning given by section 272 ‑ 80. fixed entitlement has the meaning given by Subdivision 272 ‑ A. fixed trust has the meaning given by section 272 ‑ 65. government body means: (a) the Commonwealth, a State or a Territory; or (b) a municipal corporation or other local governing body; or (c) a foreign state. group has the meaning given by subsection 269 ‑ 95(5). income year includes a year of income. indirectly has a meaning affected by sections 272 ‑ 20 and 272 ‑ 63. interposed entity election has the meaning given by section 272 ‑ 85. listed public company has the meaning given by section 272 ‑ 135. listed widely held trust has the meaning given by section 272 ‑ 115. loss year means the income year in which a tax loss was incurred. member of a company includes a shareholder, stockholder or holder of a life insurance policy of the company. more than a 50% stake has the meaning given by section 269 ‑ 50. mutual affiliate company has the meaning given by section 121AC. mutual insurance company has the meaning given by section 121AB. non ‑ fixed trust has the meaning given by section 272 ‑ 70. pass the 50% stake test has the meaning given by section 269 ‑ 55. pass the business continuity test has the meaning given by Subdivision 269 ‑ F. pass the family control test has the meaning given by section 272 ‑ 87. pass the pattern of distributions test has the meaning given by section 269 ‑ 60. pooled superannuation trust means a pooled superannuation trust within the meaning of section 48 of the Superannuation Industry (Supervision) Act 1993 . scheme has the same meaning as in subsection 177A(1). special company means: (a) a mutual affiliate company; or (b) a mutual insurance company; or (c) a company whose constituent document prevents it from distributing both income and capital (within the meaning of section 272 ‑ 50) to any member of the company; or (d) a credit union, within the meaning of section 3 of the Financial Institutions Codes (as defined in section 111AZC of the Corporations Act 2001 ), whose constituent documents prevent it from paying dividends to its members; or (e) a company that is prescribed by the regulations. specified individual in relation to a family trust election has the meaning given by subsection (2). tax loss means: (a) a loss within the meaning of former section 79E, 80 or 80AA; or (b) a film loss within the meaning of former section 79F or 80AAA; or (c) a tax loss worked out under section 36 ‑ 10 of the Income Tax Assessment Act 1997 (including such a tax loss as increased under section 415 ‑ 15 of that Act). trading in units in a unit trust has the meaning given by section 269 ‑ 10. unlisted very widely held trust has the meaning given by section 272 ‑ 120. unlisted widely held trust has the meaning given by section 272 ‑ 110. wholesale widely held trust has the meaning given by section 272 ‑ 125. widely held unit trust has the meaning given by section 272 ‑ 105. (2) A reference in this Schedule to a person specified in a family trust election is a reference to: (a) if the family trust election has not been varied—the person specified for the purposes of subsection 272 ‑ 80(3); or (b) if the family trust election has been varied—the person most recently specified under subsection 272 ‑ 80(5A) or (5C).

Amendment history: Inserted by No 17 of 1998, Sch 2F item 269 | Sch 2F item 272 | Sch 2F item 9, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 55 of 2001, Sch 3 item 263, effective s 4–14 and Sch 3 (items 220–263): 15 July 2001 (s 2(1), (3)) | Amended by No 101 of 2006, Sch 2 item 546, 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 8 item 11 | Sch 8 item 12 | Sch 8 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 164 of 2007, Sch 10 item 56, 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 144 of 2008, Sch 14 item 56 | Sch 14 item 57, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36) | Amended by No 114 of 2010, Sch 1 item 38, effective Sch 1 (items 1–39, 93–96): 14 July 2010 (s 2(1) items 2, 4) Sch 1 (items 88–92): 14 Sept 2006 (s 2(1) item 3) | Amended by No 124 of 2013, Sch 2 item 19 | Sch 2 item 20, effective Sch 2 (items 1, 7–20): 11 July 2013 (s 2(1) item 3) Sch 2 (items 49–65): 29 June 2013 (s 2(1) item 4) Sch 11 (items 33, 34, 56(1)): 30 June 2013 (s 2(1) item 22) | Amended by No 7 of 2019, Sch 1 item 31 | Sch 1 item 32, effective Sch 1 (items 14–32, 164): 1 Apr 2019 (s 2(1) item 1)

s 326-1 — What this Division is about

This Division sets out the taxation consequences of the demutualisation of mutual entities other than insurance companies and health insurers.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 97 of 2008, Sch 1 item 1, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3)

s 326-5 — Application

(1) This Division applies to the demutualisation of a mutual entity referred to in section 326 ‑ 10 if, and only if: (a) where the demutualisation resolution day was 14 March 2002 or was or is a later day—the members of the entity have passed a resolution, in accordance with the entity’s constitution, that this Division is to apply to the demutualisation; and (b) the entity was a resident immediately before the demutualisation resolution day; and (c) the demutualisation has been or is implemented as mentioned in section 326 ‑ 40; and (d) the continuity of beneficial interest test in section 326 ‑ 60 is satisfied in relation to the demutualisation; and (e) the demutualisation of the entity was or is completed on or after 12 May 1998. (2) For the purposes of paragraph (1)(e), the demutualisation of an entity is taken to have been or to be completed: (a) if the demutualisation is implemented in accordance with the direct method or the distributing trust method of demutualisation—on the day on which all the shares in the company that the entity became or becomes that were or are to be issued in connection with the demutualisation have been issued; or (b) if the demutualisation is implemented in accordance with the holding company method of demutualisation—on the day on which all the shares in the holding company that were or are to be issued in connection with the demutualisation have been issued; or (c) if the demutualisation is implemented in accordance with the combined direct and holding company method of demutualisation—on the later of the following days: (i) the day on which all the shares in the company that the entity became or becomes that were or are to be issued in connection with the demutualisation have been issued; (ii) the day on which all the shares in the holding company that were or are to be issued in connection with the demutualisation have been issued. (3) If this Division applies to the demutualisation of a mutual entity as mentioned in subsection (1), Subdivisions 326 ‑ C to 326 ‑ N provide for modifications of this Act and the Income Tax Assessment Act 1997 as those Acts have effect in respect of the entity. (4) For the purposes of this Division, the giving of consideration (other than the payment of an amount) for the acquisition of shares or an interest in shares is taken to constitute the payment of an amount equal to the value of the consideration.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 1 | Sch 10 item 2, 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 2006, Sch 1 item 199, 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 326-10 — Mutual entity and demutualisation

(1) An entity is a mutual entity if, and only if, immediately before the demutualisation resolution day, it is a body corporate that: (a) is not an insurance company within the meaning of subsection 121AB(2); and (b) is not a mutual affiliate company within the meaning of section 121AC; and (ba) is not an entity to which item 6.3 of the table in section 50 ‑ 30 of the Income Tax Assessment Act 1997 (about private health insurers) applies; and (bb) is not an entity in relation to whose demutualisation Division 316 (Demutualisation of friendly society health or life insurers) of that Act applies; and (c) is not carried on for the object of securing a profit or pecuniary gain for its members; and (d) does not have capital divided into shares held by its members; and (e) does not hold property in which any of its members has a disposable interest (whether directly or indirectly) except in the event of the winding up of the entity. (1A) If the entity is a mutual entity (within the meaning of the Corporations Act 2001 ), then, for the purposes of subsection (1), disregard the following: (a) any MCIs (within the meaning of that Act) issued by the entity; (b) any dividends or profits paid or payable in respect of such MCIs; (c) any members of the entity who are members by virtue of holding such MCIs. (2) A mutual entity that has passed a demutualisation resolution is called a demutualising entity . (3) A mutual entity is demutualised if it ceases to be a mutual entity otherwise than by ceasing to be a body corporate. Such an entity is called a demutualised entity . (4) A reference to a demutualising entity includes a reference to a demutualised entity.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2) | Amended by No 97 of 2008, Sch 1 item 2, 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 88 of 2009, Sch 3 item 3, effective s 4, Sch 1, Sch 3 (items 2–4), Sch 4 (items 1, 5) and Sch 5 (items 21–112, 306–318): 18 Sept 2009 (s 2(1) items 1, 2, 6, 7, 10) Sch 2 (items 2, 3): 1 Oct 2009 (s 2(1) item 3) | Amended by No 37 of 2019, Sch 2 item 16, effective Sch 2 (items 13–16): 6 Apr 2019 (s 2(1) item 1)

s 326-15 — Provisions relating to listing on a stock exchange

(1) A share is listed if it is listed for quotation in the official list of ASX Limited. (2) The expression “listed public company” has the same meaning as in the Income Tax Assessment Act 1997 . (3) A listing resolution , in relation to the demutualisation of a mutual entity, is a resolution passed by the members of the entity requiring the entity, or a holding company of the entity, to become a listed public company. (4) The day on which demutualisation shares are first listed is the demutualisation listing day .

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 97 of 2008, Sch 3 item 40, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3)

s 326-20 — Demutualisation resolutions etc.

(1) The demutualisation resolution , in relation to the demutualisation of a mutual entity, is a resolution passed by the members of the entity to proceed with the demutualisation of the entity. (2) The demutualisation resolution day , in relation to the demutualisation of a mutual entity, is the day on which the demutualisation resolution was or is passed. (3) The limitation period , in relation to the demutualisation of a mutual entity, is the period of 2 years beginning on the demutualisation resolution day or such further period as the Commissioner allows.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-25 — Demutualisation shares

The demutualisation shares , in relation to a demutualised entity, are: (a) the ordinary shares in the entity that are issued as mentioned in paragraphs 326 ‑ 45(1)(c) and (d); and (b) the ordinary shares in the holding company that are issued as mentioned in paragraphs 326 ‑ 50(1)(d) and (e); and (ba) the ordinary shares in the entity that are issued as mentioned in paragraphs 326 ‑ 52(1)(c) and (e); and (bb) the ordinary shares in the holding company that are issued as mentioned in paragraphs 326 ‑ 52(1)(f) and (g); and (c) the ordinary shares in the entity that are issued as mentioned in paragraphs 326 ‑ 55(1)(f) and (g); and (d) the special shares in the entity that are issued as mentioned in paragraph 326 ‑ 55(1)(c).

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 3, 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)

s 326-30 — Existing members and new members

(1) An existing member of a mutual entity that demutualises is: (a) a person who was a member of the entity on the earlier of the following days: (i) the demutualisation resolution day; (ii) the share allocation cut ‑ off day; or (b) a person who became entitled to an allocation of demutualisation shares because of the death of a person referred to in paragraph (a). (2) If the members of a mutual entity that is being demutualised have passed or pass a resolution to the effect that any person who became or becomes a member after a specified day is not entitled to an allocation of demutualisation shares, that day is the share allocation cut ‑ off day in relation to the demutualisation of the entity. (3) A new member of a mutual entity that demutualises is a person who is a member of the entity other than an existing member. (4) A reference to a member of a mutual entity that demutualises is taken, unless the contrary intention appears, to be a reference to a person who is an existing member or a new member of the entity.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-35 — Pre ‑ CGT members and post ‑ CGT members

(1) A person is a pre ‑ CGT member of a demutualising entity if: (a) the person’s membership rights in the entity are a pre ‑ CGT asset within the meaning of the Income Tax Assessment Act 1997 ; or (b) both of the following apply: (i) the person acquired membership rights in the entity by disposing of membership rights in another mutual entity; and (ii) the person acquired membership rights in the other entity before 20 September 1985. (2) A person is a post ‑ CGT member of a demutualising entity if the person is not a pre ‑ CGT member.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-40 — Methods of demutualisation

A demutualisation of a mutual entity is to be implemented in accordance with one of the methods set out in sections 326 ‑ 45, 326 ‑ 50, 326 ‑ 52 and 326 ‑ 55.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 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)

s 326-45 — Direct method

(1) The direct method of demutualisation is as follows: (a) all membership rights in the entity are extinguished; (b) the entity becomes a company with a share capital; (c) shares ( ordinary shares ) of only one class in the entity are issued within the limitation period to existing members in exchange for the membership rights referred to in paragraph (a); (d) shares (also ordinary shares ) of the same class in the entity may be issued within the limitation period to new members; (e) if a listing resolution was passed by the members of the entity—the ordinary shares are listed within the limitation period. Note: Other things may happen in connection with the implementation of the demutualisation. (2) The following diagram shows, where this demutualisation method is used, the issue of shares to members of the entity.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2)

s 326-50 — Holding company method

(1) The holding company method of demutualisation is as follows: (a) all membership rights in the entity are extinguished; (b) the entity becomes a company with a share capital; (c) shares of only one class in the entity are issued to a company (the holding company ) within the limitation period; (d) shares ( ordinary shares ) of only one class in the holding company are issued within the limitation period to existing members in exchange for the membership rights referred to in paragraph (a); (e) shares (also ordinary shares ) in the holding company of the same class may be issued within the limitation period to new members; (f) if a listing resolution was passed by the entity—the ordinary shares are listed within the limitation period. Note: Other things may happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events that occur where this demutualisation method is used.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 5, 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)

s 326-52 — Combined direct and holding company method

(1) The combined direct and holding company method of demutualisation is as follows: (a) all membership rights in the entity are extinguished; (b) the entity becomes a company with a share capital; (c) shares ( ordinary shares ) of only one class in the entity are issued within the limitation period to existing members in exchange for the membership rights referred to in paragraph (a); (d) shares (also ordinary shares ) of the same class in the entity are also issued to a company (the holding company ) within the limitation period; (e) shares (also ordinary shares ) of the same class in the entity may be issued within the limitation period to new members; (f) shares (also ordinary shares ) of only one class in the holding company are issued within the limitation period to existing members as a result of the extinguishment of the membership rights referred to in paragraph (a); (g) shares (also ordinary shares ) of the same class in the holding company may be issued within the limitation period to new members; (h) the total number of ordinary shares issued to members under paragraphs (f) and (g) is the same as the total number of ordinary shares issued to the holding company under paragraph (d); (i) if a listing resolution was passed by the members of the entity—the ordinary shares in the entity are listed within the limitation period. Note: Other things may happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events that occur where this demutualisation method is used.

Amendment history: Inserted by No 57 of 2002, Sch 10 item 6, 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)

s 326-55 — Distributing trust method

(1) The distributing trust method of demutualisation is as follows: (a) all membership rights in the mutual entity are extinguished; (b) the entity becomes a company with a share capital; (c) shares ( special shares ) carrying only voting rights in respect of the demutualised entity are issued within the limitation period to a trustee to hold for the benefit of the members; (d) the issue takes place before the issue of the ordinary shares mentioned in paragraphs (f) and (g); (e) after the issue of all the ordinary shares, the rights attaching to the special shares become the same as those attaching to the ordinary shares and the special shares are dealt with in accordance with paragraph (h) as if they were ordinary shares; (f) shares ( ordinary shares ) of only one class in the entity are, within the limitation period, issued to the trustee to hold on behalf of existing members in exchange for the membership rights referred to in paragraph (a) and, in accordance with the choice of each existing member, to transfer to the member the shares held on behalf of the member or to dispose of those shares on behalf of the member; (g) shares (also ordinary shares ) of the same class in the entity may, within the limitation period, be issued to the trustee on behalf of new members and, in accordance with the choice of each new member, to transfer to the member the shares held on behalf of the member or to dispose of those shares on behalf of the member; (h) within the limitation period the trustee: (i) sells the ordinary shares issued to the trustee and distributes the proceeds to the member; or (ii) transfers the ordinary shares to the member; (i) if a listing resolution was passed by the entity—the ordinary shares are listed within the limitation period. Note: Other things may happen in connection with the implementation of the demutualisation. (2) The trustee must be the trustee of a trust established solely for the purposes of performing functions under subsection (1). (3) The following diagram shows the main events that occur where this demutualisation method is used.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2)

s 326-60 — Continuity of beneficial interest test

(1) This section sets out a test (the continuity of beneficial interest test ) that must be satisfied before this Division applies to the demutualisation of a mutual entity. (2) The continuity of beneficial interest test is satisfied if: (a) an opportunity is given to each existing member of the mutual entity: (i) to take up shares in the demutualised entity or in a holding company to which shares in the demutualised entity are issued; or (ii) to have shares in the demutualised entity issued to a trustee on behalf of the member; and (b) where the demutualisation is implemented by the method set out in section 326 ‑ 45, 326 ‑ 50 or 326 ‑ 55—of the ordinary shares in the demutualised entity or holding company that are issued in connection with the demutualisation (the issued shares ), the total number that are issued to existing members or to a trustee on behalf of existing members constitutes at least 90% of the issued shares; and (ba) where the demutualisation is implemented by the method set out in section 326 ‑ 52: (i) of the ordinary shares in the demutualised entity that are issued to members other than the holding company in connection with the demutualisation (the issued entity shares ), the total number that are issued to existing members constitutes at least 90% of the issued entity shares; and (ii) of the ordinary shares in the holding company that are issued in connection with the demutualisation (the issued holding company shares ), the total number that are issued to existing members constitutes at least 90% of the issued holding company shares; and (c) the accumulated surplus of the mutual entity is allocated or distributed in the form of shares, or cash from the sale of shares, to existing members in proportions that broadly accord with any one or more of the following: (i) the respective amounts contributed by the members to the entity; (ii) the respective values of the membership rights of the members; (iii) the respective rights of the members on the winding up of the entity. (3) In this section: accumulated surplus , in relation to a demutualised entity, means the net assets of the entity on the demutualisation resolution day.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 6, 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)

s 326-65 — Extinguishment of membership rights

Application (1) This section applies where membership rights are extinguished as mentioned in paragraph 326 ‑ 45(1)(a), 326 ‑ 50(1)(a), 326 ‑ 52(1)(a) or 326 ‑ 55(1)(a). Modification (2) A capital gain or capital loss arising from the extinguishment of the membership rights of a member is to be disregarded.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 7, 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)

s 326-70 — Application of Subdivision

(1) This Subdivision applies where a member (the disposer ) of a mutual entity which, or a holding company of which, becomes a listed public company disposes of an asset consisting of: (a) a demutualisation share in the listed public company or an interest in such a share; or (b) other shares ( non ‑ demutualisation bonus shares ) in the same company, or an interest in such shares, where the shares are bonus equities mentioned in Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original equities mentioned in that Subdivision. (2) For the purposes of this Subdivision, if any of the original equities mentioned in Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 is a demutualisation share, it is called a demutualisation original share .

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 8, 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 2006, Sch 2 item 554 | Sch 2 item 555, 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 326-75 — Capital losses made from certain disposals to be disregarded

A capital loss that the disposer makes from a disposal to which section 326 ‑ 80 or 326 ‑ 100 applies is to be disregarded.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2)

s 326-80 — Disposal by pre ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share before demutualisation listing day where member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; and (d) the disposal occurs before the demutualisation listing day; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (e) to have paid for the acquisition of the share or interest the amount worked out by using the formula: (f) to have paid that amount on the demutualisation resolution day; (g) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in paragraph (1)(e): total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2)

s 326-85 — Disposal by pre ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share on or after demutualisation listing day where member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; and (d) the disposal occurs on or after the demutualisation listing day; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (e) to have paid for the acquisition of the share or interest the lesser of the following amounts: (i) the amount worked out by using the formula: (ii) the amount worked out by using the formula: (f) to have paid the amount referred to in paragraph (e) on the demutualisation resolution day; (g) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(e)(i): total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-90 — Disposal by pre ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share where member acquired membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (d) to have paid for the acquisition of the share or interest both of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; (e) to have paid the amount referred to in subparagraph (d)(i) on the demutualisation resolution day; (f) to have paid any amount referred to in subparagraph (d)(ii) when it was actually paid; (g) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(d)(i): number of disposer’s shares means the number of demutualisation shares issued to the disposer or in which the disposer had an interest. number of members means the total number of members of the other mutual entity at the time of the disposal of the membership rights in that entity.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-95 — Disposal by post ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer is a post ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (c) to have paid for the acquisition of the share or interest both of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; (d) to have paid the amount referred to in subparagraph (c)(i) on the demutualisation resolution day; (e) to have paid any amount referred to in subparagraph (c)(ii) when it was actually paid; (f) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(c)(i): number of disposer’s shares means the number of demutualisation shares issued to the disposer or in which the disposer had an interest.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-100 — Disposal by pre ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share, before demutualisation listing day where member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; and (d) the disposal occurs before the demutualisation listing day; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (e) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the amount worked out by using the formula: (f) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount referred to in paragraph (e) on the demutualisation resolution day; and (ii) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in paragraph (1)(e): number of disposer’s shares means the number of demutualisation original shares issued to the disposer or in which the disposer had an interest. total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-105 — Disposal by pre ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share, on or after demutualisation listing day where member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; and (d) the disposal occurs on or after the demutualisation listing day; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (e) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the lesser of the following amounts: (i) the amount worked out by using the formula: (ii) the amount worked out by using the formula: (f) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount referred to in paragraph (e) on the demutualisation resolution day; and (ii) to have acquired the share or interest on the demutualisation resolution day. (2) In the formulas in subparagraphs 1(e)(i) and (ii): number of disposer’s shares means the number of demutualisation original shares issued to the disposer or in which the disposer had an interest. total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-110 — Disposal by pre ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share, where member acquired membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (d) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the sum of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; (e) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount referred to in subparagraph (d)(i) on the demutualisation resolution day; and (ii) to have paid any amount referred to in subparagraph (d)(ii) when it was actually paid; and (iii) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(d)(i): number of members means the total number of members of the other entity at the time of the disposal of the membership rights in that entity.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-115 — Disposal by post ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share or an interest in such a share

If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer is a post ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (c) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the sum of: (i) an amount equal to the undeducted membership costs; and (ii) any amount actually paid for the acquisition; (d) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount referred to in subparagraph (c)(i) on the demutualisation resolution day; and (ii) to have paid any amount referred to in subparagraph (c)(ii) when it was actually paid; and (iii) to have acquired the share or interest on the demutualisation resolution day.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-120 — Adjusted market value

Where membership rights not acquired by disposal of rights in another entity (1) For the purposes of this Subdivision, the adjusted market value , when the expression is used in relation to a disposer who did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity, is the market value, as determined by a qualified valuer, of the demutualising entity on the demutualisation resolution day. However, in making the determination the valuer is to disregard the franking surplus of that entity on that day. Where membership rights acquired by disposal of rights in another entity (2) For the purposes of this Subdivision but subject to subsection (3), the adjusted market value , when the expression is used in relation to a disposer who acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity, is the market value, as determined by a qualified valuer, of the other entity at the time immediately before the disposer disposed of membership rights in the other entity. However, in making the determination the valuer is to disregard the franking surplus of the other entity at that time. Indexation of amount mentioned in subsection (2) (3) If the indexation factor (see section 326 ‑ 235) of the amount worked out under subsection (2) is more than one, that amount is taken to be replaced by that amount as indexed under Subdivision 326 ‑ M.

Amendment history: Inserted by No 103 of 1999, Sch 2H item 326, effective Sch 1: 16 July 1999 (s 2) | Amended by No 23 of 2005, Sch 3 item 71, effective s 4 and Sch 3 (items 14–74, 111(3)–(5), 112–114): 21 Mar 2005 (s 2(1) items 1, 6)

s 326-125 — Undeducted membership costs

(1) For the purposes of this Subdivision, the undeducted membership costs , when the expression is used in relation to a disposer who did not acquire membership rights in the demutualising entity by the disposal of membership rights in another mutual entity, are the sum of the undeducted amounts of the costs that were incurred by the disposer in acquiring and maintaining membership in the demutualising entity less any distributions that: (a) were made by the demutualising entity to the disposer before any shares in the demutualised entity were issued; and (b) were not included in the disposer’s assessable income of any year of income. (2) For the purposes of this Subdivision, the undeducted membership costs , when the expression is used in relation to a disposer who acquired membership rights in the demutualising entity by the disposal of membership rights in another mutual entity, are: (a) if the disposer was a pre ‑ CGT member—the sum of the undeducted amounts of the costs that were incurred by the disposer in maintaining membership in the demutualising entity less any distributions that: (i) were made by the demutualising entity to the disposer before any shares in the demutualised entity were issued; and (ii) were not included in the disposer’s assessable income of any year of income; or (b) if the disposer is a post ‑ CGT member, the sum of: (i) the undeducted amounts of the costs that were incurred by the disposer in acquiring and maintaining membership in the other entity; and (ii) the undeducted amounts of the costs that were incurred by the disposer in maintaining membership in the demutualising entity; less any distributions that: (iii) were made by the demutualising entity or the other entity to the disposer before any shares in the demutualised entity were issued; and (iv) were not included in the disposer’s assessable income of any year of income. (3) If at any time 2 or more persons were joint members of a mutual entity, any costs incurred by any one or more of them in acquiring or maintaining the joint membership are taken to have been incurred by each of them. (4) Subject to subsection (5), the undeducted amount of a cost is the amount of the cost to the extent to which a deduction has not been allowed, and is not allowable, in respect of it. (5) If: (a) an amount of a cost referred to in subsection (1) or (2) was incurred before the demutualisation resolution day; and (b) the indexation factor (see section 326 ‑ 235) of the amount is more than one; a reference in this section to the undeducted amount of that cost is a reference to the undeducted amount as indexed under Subdivision 326 ‑ M.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-130 — Adjusted first day trading price of demutualisation shares

(1) For the purposes of this Subdivision, the adjusted first day trading price of demutualisation shares is the amount worked out using the formula: (2) In this section: first day trading price of demutualisation shares means the price per share, as published by ASX Limited, at which the demutualisation shares were last traded, on the stock market operated by ASX Limited, on the demutualisation listing day. value of franking surplus means the value, as determined by a qualified valuer, of the franking surplus of the demutualised entity on the demutualisation listing day.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 23 of 2005, Sch 3 item 72, 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 97 of 2008, Sch 3 item 41, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3)

s 326-135 — Application of Subdivision

(1) This Subdivision applies where a member (the disposer ) of a mutual entity which, or a holding company of which, becomes a company that is not a listed public company disposes of an asset consisting of: (a) a demutualisation share in that company that is not a listed public company or an interest in such a share; or (b) other shares ( non ‑ demutualisation bonus shares ) in the same company, or an interest in such shares, where the shares are bonus equities mentioned in Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original equities mentioned in that Subdivision. (2) For the purposes of this Subdivision, if any of the original equities mentioned in Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , is a demutualisation share, it is called a demutualisation original share .

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 9, 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 2006, Sch 2 item 557 | Sch 2 item 558, 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 326-140 — Disposal by pre ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share where a member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualisation entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (d) to have paid for the acquisition of the share or interest the amount worked out by using the formula: (e) to have paid that amount on the demutualisation resolution day; (f) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in paragraph (1)(d): total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-145 — Disposal by pre ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share where member acquired membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (d) to have paid for the acquisition of the share or interest both of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; (e) to have paid the amount referred to in subparagraph (d)(i) on the demutualisation resolution day; (f) to have paid any amount referred to in subparagraph (d)(ii) when it was actually paid; (g) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(d)(i): number of disposer’s shares means the number of demutualisation shares issued to the disposer or in which the disposer had an interest. number of members means the total number of members of the other mutual entity at the time of the disposal of the membership rights in that entity.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-150 — Disposal by post ‑ CGT member of a demutualisation share (other than a demutualisation original share) or an interest in such a share

(1) If: (a) the disposal is a disposal of a demutualisation share (other than a demutualisation original share) or an interest in such a share; and (b) the disposer is a post ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the disposer is taken to have done the following: (c) to have paid for the acquisition of the share or interest both of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; (d) to have paid the amount referred to in subparagraph (c)(i) on the demutualisation resolution day; (e) to have paid any amount referred to in subparagraph (c)(ii) when it was actually paid; (f) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(c)(i): number of disposer’s shares means the number of demutualisation shares issued to the disposer or in which the disposer had an interest.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-155 — Disposal by pre ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share, where member did not acquire membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs apply: (d) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the amount worked out by using the formula: (e) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount referred to in paragraph (d) on the demutualisation resolution day; and (ii) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in paragraph (1)(d): number of disposer’s shares means the number of demutualisation original shares issued to the disposer or in which the disposer had an interest. total number of shares means the total number of demutualisation shares issued.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-160 — Disposal by pre ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share, where member acquired membership rights by disposing of membership rights in another mutual entity

(1) If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and (c) the disposer is a pre ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (d) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be both of the following amounts: (i) the amount worked out by using the formula: (ii) any amount actually paid for the acquisition; and (e) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken to have done the following: (i) to have paid the amount referred to in subparagraph (d)(i) on the demutualisation resolution day; (ii) to have paid any amount referred to in subparagraph (d)(ii) when it was actually paid; (iii) to have acquired the share or interest on the demutualisation resolution day. (2) In the formula in subparagraph (1)(d)(i): number of members means the total number of members of the other mutual entity at the time of the disposal of the membership rights in that entity.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-165 — Disposal by post ‑ CGT member of a demutualisation original share or a non ‑ demutualisation bonus share, or an interest in such a share

If: (a) the disposal is a disposal of either: (i) a demutualisation original share or an interest in such a share; or (ii) a non ‑ demutualisation bonus share or an interest in such a share; and (b) the disposer is a post ‑ CGT member; then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect: (c) for the purpose of applying Subdivision 130 ‑ A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be both of the following amounts: (i) an amount equal to the undeducted membership costs; (ii) any amount actually paid for the acquisition; (d) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken to have done the following: (i) to have paid the amount referred to in subparagraph (c)(i) on the demutualisation resolution day; (ii) to have paid any amount referred to in subparagraph (c)(ii) when it was actually paid; (iii) to have acquired the share or interest on the demutualisation resolution day.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 101 of 2006, 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 326-170 — Various adjusted market values

Application (1) This section has effect for the purposes of this Subdivision. Where membership rights not acquired by disposal of rights in another entity (2) The adjusted market value , when the expression is used in relation to a disposer who did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity, is the lesser of the issue day adjusted market value and the resolution day adjusted market value. Where membership rights acquired by disposal of rights in another entity (3) The adjusted market value , when the expression is used in relation to a disposer who acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity, is the disposal day adjusted market value. Issue day adjusted market value (4) The issue day adjusted market value is the market value, as determined by a qualified valuer, of the demutualised entity on the day on which the demutualisation shares were issued. However, in making the determination the valuer is to disregard the franking surplus of the demutualised entity on that day. Resolution day adjusted market value (5) The resolution day adjusted market value is the market value, as determined by a qualified valuer, of the demutualising entity on the demutualisation resolution day. However, in making the determination the valuer is to disregard the franking surplus of the demutualising entity on that day. Disposal day adjusted market value (6) Subject to subsection (7), the disposal day adjusted market value is the market value, as determined by a qualified valuer, of the other entity at the time immediately before the disposer disposed of membership rights in the other entity. However, in making the determination the valuer is to disregard the franking surplus of the other entity at that time. Indexation of amount mentioned in subsection (6) (7) If the indexation factor (see section 326 ‑ 235) of the amount worked out under subsection (6) is more than one, that amount is taken to be replaced by that amount as indexed under Subdivision 326 ‑ M.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 23 of 2005, Sch 3 item 73 | Sch 3 item 74, effective s 4 and Sch 3 (items 14–74, 111(3)–(5), 112–114): 21 Mar 2005 (s 2(1) items 1, 6)

s 326-175 — Undeducted membership costs

(1) For the purposes of this Subdivision, the undeducted membership costs , when the expression is used in relation to a disposer who did not acquire membership rights in the demutualising entity by the disposal of membership rights in another mutual entity, are the sum of the undeducted amounts of the costs that were incurred by the disposer in acquiring and maintaining membership in the demutualising entity less any distributions that: (a) were made by the demutualising entity to the disposer before any shares in the demutualised entity were issued; and (b) were not included in the disposer’s assessable income of any year of income. (2) For the purposes of this Subdivision, the undeducted membership costs , when the expression is used in relation to a disposer who acquired membership rights in the demutualising entity by the disposal of membership rights in another mutual entity, are the sum of: (a) if the disposer was a pre ‑ CGT member—the undeducted amounts of the costs that were incurred by the disposer in maintaining membership in the demutualising entity less any distributions that: (i) were made by the demutualising entity to the disposer before any shares in the demutualised entity were issued; and (ii) were not included in the disposer’s assessable income of any year of income; or (b) if the disposer is a post ‑ CGT member, the sum of: (i) the undeducted amounts of the costs that were incurred by the disposer in acquiring and maintaining membership in the other entity; and (ii) the undeducted amounts of the costs that were incurred by the disposer in maintaining membership in the demutualising entity; less any distributions that: (iii) were made by the demutualising entity or the other entity to the disposer before any shares in the demutualised entity were issued; and (iv) were not included in the disposer’s assessable income of any year of income. (3) If at any time 2 or more persons were joint members of a mutual entity, any costs incurred by any one or more of them in acquiring or maintaining the joint membership are taken to have been incurred by each of them. (4) Subject to subsection (5), the undeducted amount of a cost is the amount of the cost to the extent to which a deduction has not been allowed, and is not allowable, in respect of it. (5) If: (a) an amount of a cost referred to in subsection (1) or (2) was incurred before the demutualisation resolution day; and (b) the indexation factor (see section 326 ‑ 235) of the amount is more than one; a reference in this section to the undeducted amount of that cost is a reference to the undeducted amount as indexed under Subdivision 326 ‑ M.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-180 — Amount taken to be paid for acquisition of shares or interest by member to be increased by capital gain or reduced by capital loss

(1) This section applies if: (a) a post ‑ CGT member of a mutual entity that has been demutualised acquired membership rights in the entity by the disposal of membership rights in another mutual entity; and (b) the member made a capital gain or capital loss from the disposal of membership rights in the other mutual entity; and (c) the member has acquired shares or an interest in shares in the demutualised entity or in a company that holds shares in the demutualised entity. (2) If the member disposes of a demutualisation original share or a non ‑ demutualisation bonus share, the amount paid for the acquisition of all the demutualisation original shares is taken to be increased by the amount of the capital gain or reduced by the amount of the capital loss, as the case may be. (3) If subsection (2) does not apply, the amount that is taken, under Subdivision 326 ‑ D or 326 ‑ E, to have been paid by the member for the acquisition of the share or interest is taken to be increased by the proportionate part of the amount of the capital gain or reduced by the proportionate part of the amount of the capital loss, as the case may be.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2)

s 326-185 — Disposal of right to receive shares in demutualised entity

(1) This section applies if: (a) under the direct method of demutualisation, or the combined direct and holding company method of demutualisation, of a mutual entity, the membership rights of an existing member of the entity are extinguished; and (b) as a result of the extinguishment of the rights, the member acquires a right or an interest in a right to have shares in the demutualised entity issued to the member; and (c) the member disposes of the whole or a part of the right or interest otherwise than by receiving the shares. (2) For the purpose of working out whether the member made a capital gain or capital loss from the disposal, the member is taken to have done the following: (a) to have paid for the acquisition of the right or interest in the right the amount worked out by using the formula: (b) to have paid that amount, and to have acquired the right or interest, on the demutualisation resolution day. (3) In the formula in paragraph (2)(a): cost of a share or interest means the amount that would have been taken to have been paid by the member for the acquisition of a share or an interest in a share in the demutualised entity under Subdivisions 326 ‑ D, 326 ‑ E and 326 ‑ F if the disposal had been the disposal of the shares to which the right or interest in the right related. number of shares means the number of shares to which the right or interest in the right related. (4) If the member is a pre ‑ CGT member who did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity, any capital loss made from the disposal before the demutualisation listing day, or, if there is no such day, before the day on which the shares in the demutualised entity were issued, is to be disregarded.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 10, 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)

s 326-190 — Extinguishment of right to shares in demutualised entity by the issue of the shares

(1) If, under the direct method of demutualisation or the holding company method of demutualisation, shares in a demutualised entity are issued to an existing member, Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 do not apply in respect of any CGT event constituted by the extinguishment of the member’s right to have the shares issued to the member. (2) If, under the combined direct and holding company method of demutualisation, shares in a demutualised entity or in a holding company are issued to an existing member, Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 do not apply in respect of any CGT event constituted by the extinguishment of the member’s rights to have the shares issued to the member.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 11, 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) | Repealed and substituted by No 101 of 2006, Sch 2 item 560, 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 326-195 — Disposal of right to receive shares in holding company

(1) This section applies if: (a) under the holding company method of demutualisation, or the combined direct and holding company method of demutualisation, of a mutual entity: (i) the membership rights of an existing member of the entity are extinguished; and (ii) shares in the demutualised entity are issued to a company (the holding company ); and (b) as a result of the extinguishment of the rights, the member acquires a right or an interest in a right to have shares in the holding company issued to the member; and (c) the member disposes of the whole or a part of the right or interest otherwise than by receiving the shares. (2) For the purpose of working out whether the member made a capital gain or capital loss from the disposal, the member is taken to have done the following: (a) to have paid for the acquisition of the right or interest in the right the amount worked out by using the formula: (b) to have paid that amount, and to have acquired the right or interest, on the demutualisation resolution day. (3) In the formula in paragraph (2)(a): cost of a share or interest means the amount that would have been taken to have been paid by the member for the acquisition of a share or an interest in a share in the holding company under Subdivisions 326 ‑ D, 326 ‑ E and 326 ‑ F if the disposal had been the disposal of the shares in the holding company to which the right or interest in the right related. number of shares means the number of shares in the holding company to which the right or interest in the right related. (4) If the member is a pre ‑ CGT member who did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity, any capital loss made from the disposal before the demutualisation listing day, or, if there is no such day, before the day on which the shares in the holding company were issued, is to be disregarded.

Amendment history: Inserted by No 103 of 1999, effective Sch 1: 16 July 1999 (s 2) | Amended by No 57 of 2002, Sch 10 item 12, 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)