Document ID: chunk:federal_register_of_legislation:C2025C00014:section:159gzzzq:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 159GZZZQ (pt 1/3)
Character Range: 1467738–1470317

159GZZZQ  Consideration in respect of off‑market purchase
 (1) Subject to this section, if a buy‑back of a share is an off‑market purchase, then:
 (a) in determining, for the purposes of this Act:
 (i) whether an amount is included in the assessable income of the seller under a provision of this Act other than Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 (about CGT); or
 (ii) whether an amount is allowable as a deduction to the seller; or
 (b) whether the seller makes a capital gain or capital loss;
in respect of the buy‑back, the seller is taken to have received or to be entitled to receive, as consideration in respect of the sale of the share, an amount equal to the purchase price in respect of the buy‑back.

Deemed consideration increased to market value
 (2) If apart from this section:
 (a) the purchase price in respect of the buy‑back;
is less than:
 (b) the amount that would have been the market value of the share at the time of the buy‑back if the buy‑back did not occur and was never proposed to occur;
then, subject to subsection (3), in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share is equal to the market value mentioned in paragraph (b) of this subsection.

Deemed consideration reduced where dividend assessable etc.
 (3) Subject to subsections (3A) and (8), if there is a reduction amount in respect of the buy‑back (see subsection (4)), then, in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share, after any application of subsection (2), is reduced by the reduction amount.
 (3A) Subsection (3) does not apply if the buy‑back is by a listed public company.

Reduction amount
 (4) The following steps are to be taken in working out whether there is a reduction amount in respect of the buy‑back:
 (a) first, work out whether the whole or part of the purchase price in respect of the buy‑back is taken to be a dividend by section 159GZZZP;
 (b) second, for any amount satisfying paragraph (a), work out whether the whole or part of it is either:
 (i) included in the seller's assessable income of any year of income (disregarding section 128D of this Act and section 802‑15 of the Income Tax Assessment Act 1997); or
 (ii) an eligible non‑capital amount (see subsection (5)).
The amount worked out is the reduction amount in respect of