Document ID: chunk:federal_register_of_legislation:C2019C00215:clause:7_1:p6
Version: federal_register_of_legislation:C2019C00215
Segment Type: clause
Provision Reference: sch 7 cl 1 (pt 6/10)
Character Range: 94487–97271

other entity, or any entity *connected with the other entity, in the test entity, disregard any direct or indirect entitlements (including contingent entitlements) of the other entity, or connected entity, to remuneration from the test entity:
 (a) to the extent that the remuneration is subject to income tax in relation to the income year for which the consequences (if any) under subsection 842‑215(1) or (2) are being determined in relation to the test entity; and
 (b) to the extent that the remuneration is subject to taxation in relation to that income year under a *foreign law.
Example: Assume that 4 entities have interests in an IMR entity, as follows:
(a) a life insurance company has a 55% interest;
(b) an endowment fund has a 5% interest;
(c) company A has a 25% interest. It has 2 shareholders (who are not affiliated): shareholder Y holds 60% of the shares and shareholder Z holds 40%;
(d) company B has a 15% interest. It has several shareholders.
 The IMR entity is an IMR widely held entity because:
(e) under subsection 842‑235(6), the life insurance company has a total participation interest of nil, as it is covered by paragraph 12‑402(3)(a) in Schedule 1 to the Taxation Administration Act 1953; and
(f) the endowment fund has a total participation interest below the 20% threshold in subparagraph 842‑230(2)(a)(i); and
(g) under subsection 842‑235(2), company A's 25% interest is divided between shareholder Y (15%) and shareholder Z (10%), and company A is treated as having a total participation interest in the IMR entity of nil; and
(h) company B's 15% interest is below the 20% threshold, so none of its shareholders can have a total participation interest above that threshold. (In these circumstances, it is not necessary to determine the total participation interests for each of those shareholders.)
 (Treating the life insurance company's 55% interest as a total participation interest of nil ensures that no summing of the other total participation interest can exceed the 50% threshold in subparagraph 842‑230(2)(a)(ii).)

842‑240  Extended meaning of IMR widely held entity—temporary circumstances outside entity's control
  Without limiting section 842‑230, an entity is an IMR widely held entity if:
 (a) apart from a particular circumstance, the entity would be an *IMR widely held entity because of section 842‑230; and
 (b) the circumstance is temporary; and
 (c) the circumstance arose outside the entity's control; and
 (d) it is fair and reasonable to treat the entity as an IMR widely held entity, having regard to the following matters:
 (i) the matters in paragraphs (b) and (c);
 (ii) the nature of the circumstance;
 (iii) the actions (if any) taken by the entity to address or remove the circumstance, and the speed with which such