Document ID: chunk:federal_register_of_legislation:C2010C00262:clause:1_1:p4
Version: federal_register_of_legislation:C2010C00262
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 4/5)
Character Range: 9689–12331

entity controls the other entity in a way described in this section; or
 (b) both entities are controlled in a way described in this section by the same third entity.

Direct control of an entity other than a discretionary trust

 (2) An entity (the first entity) controls another entity if the first entity, its *affiliates, or the first entity together with its affiliates:
 (a) except if the other entity is a discretionary trust—beneficially own, or have the right to acquire the beneficial ownership of, interests in the other entity that carry between them the right to receive a percentage (the control percentage) that is at least 40% of:
 (i) any distribution of income by the other entity; or
 (ii) if the other entity is a partnership—the net income of the partnership; or
 (iii) any distribution of capital by the other entity; or
 (b) if the other entity is a company—beneficially own, or have the right to acquire the beneficial ownership of, *equity interests in the company that carry between them the right to exercise, or control the exercise of, a percentage (the control percentage) that is at least 40% of the voting power in the company.

Direct control of a discretionary trust

 (3) An entity (the first entity) controls a discretionary trust if a trustee of the trust acts, or could reasonably be expected to act, in accordance with the directions or wishes of the first entity, its *affiliates, or the first entity together with its affiliates.

 (4) An entity (the first entity) controls a discretionary trust for an income year if, for any of the 4 income years before that year:
 (a) the trustee of the trust paid to, or applied for the benefit of:
 (i) the first entity; or
 (ii) any of the first entity's *affiliates; or
 (iii) the first entity and any of its affiliates;
  any of the income or capital of the trust; and
 (b) the percentage (the control percentage) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year.

Note: Section 328‑112 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007‑08, 2008‑09, 2009‑10 and 2010‑11 income years.

 (5) An entity does not control a discretionary trust because of subsection (4) if the entity is:
 (a) an *exempt entity; or
 (b) a *deductible gift recipient.

Commissioner may determine that an entity does not control another entity

 (6) If the control percentage referred to in subsection (2) or (4) is at least 40%, but less than 50%, the Commissioner may determine that the first entity does not control