Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_8:p4
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 8 (pt 4/14)
Character Range: 489334–491953

associate—an associate of that associate.

  The increase must be reasonably attributable to the thing done under the scheme, and must occur at or after the time when it is done.

Example: A company runs a family business. There are 2 shares originally issued for $2 each. They are owned by a husband and wife. The market value of the shares is much greater (represented by the value of the assets of the company less its liabilities). The company issues one more share for $2 to their son.

 Caution is needed in such a situation. This example would result in a large CGT liability for the husband and wife under this Division, because they have shifted 1/3 of the value of their own shares to their son. No such liability would arise if the share had been issued for its market value.

 (7) If it is reasonable to say that the increase or decrease in the market value of one or more *shares in the company is partly caused by the doing of the thing under the *scheme, this Division applies to the increase or decrease to that extent only.

Off‑market buy‑backs

 (8) Disregard a *share value shift that occurs in this situation:

 (a) a decrease in the market value of one or more *shares in the company is reasonably attributable to the company proposing to buy back those shares for less than their market value; and

 (b) the company does buy back those shares; and

 (c) subsection 159GZZZQ(2) of the Income Tax Assessment Act 1936 treats their owner as having received their market value worked out as if the buy‑back had not occurred and was never proposed to occur.

Note: A share value shift is disregarded under subsection (8) only if the company buys back the shares after 7.30 pm on 9 May 1995 and the buy back is not done under an excluded transitional arrangement: see subsection 140‑15(8) of the Income Tax (Transitional Provisions) Act 1997.

140‑20  When is an entity a controller (for CGT purposes) of a company?

  An entity (the first entity) is a controller (for CGT purposes) of a company if:

 (a) the first entity has an *associate‑inclusive control interest in the company of at least 50%; or

 (b) the first entity has an *associate‑inclusive control interest in the company of at least 40% and entities other than the first entity or associates of the first entity do not control the company; or

 (c) the first entity controls the company (alone or with an *associate).

140‑22  When an entity has an associate‑inclusive control interest

 (1) An entity has an associate‑inclusive control interest in a company in the circumstances set out in Subdivision A of Division 3