Bill returned from Main Committee with amendments; certified copy of bill and schedule of amendments presented.

Ordered that the bill be taken into consideration forthwith.

Main Committee's amendments—

Clause 1-2, page 2 (line 11), omit "1996", substitute "1997".

Page 17 (after line 2), insert:

Guide to Division 6

Page 17 (after line 5), insert:

Operative provisions

Page 18 (after line 7), after clause 6-1, insert:

Operative provisions

Clause 6-5,

Page 18 (line 15), after "Australia" insert ", during the income year".

Page 18 (line 19), after "Australian sources" insert "during the income year".

Page 18 (line 21), after "assessable income" insert "for the income year".

Clause 10-5,

Page 29 (lines 10 and 11), omit:

co-operative company

receipts of 119

Page 29 (after line 28), insert:

co-operative company

receipts of119

Page 36 (line 18), omit "electricity", substitute "electricity connections".

Page 38 (line 31), omit "leave", substitute "leave payments".

Clause 11-5,

Page 42 (line 12), omit:

CRAFT scheme, employer's income from 23(jc)

Page 43 (after table item dealing with sports, culture or recreation), insert:

superannuation and related business

constitutionally protected funds 271A

Clause 11-15,

Page 46 (after line 18), after:

non-resident, foreign sourced income 23(r)

insert:

OBU off-shore investment trusts, income to which subsection 121D(6) applies122EL

Page 46 (line 20), after "Papua New Guinea pension", insert ", Papua New Guinea resident".

Page 47 (line 17), omit:

policy premium, income from111

Page 47 (lines 21 and 22), omit:

reinsurance recovery and refund of premium, income from111AB

Clause 12-5,

Page 52 (lines 10 to 12), omit:

"12% of original value" methodSubdivision 28-D

substantiation of car expensesDivision 900

substitute:

substantiation of car expensesDivision 900

"12% of original value" methodSubdivision 28-D

Page 54 (lines 29 and 30), omit:

electricity

connections, capital cost of70A

substitute:

electricity connections

capital cost of70A

Page 60 (lines 28 and 29), omit:

modified application of trading stock

provisions102AAZ

modified application of depreciation

provisions102AAY

substitute:

modified application of depreciation

provisions102AAY

modified application of trading stock

provisions102AAZ

Page 61 (lines 27 to 30), omit:

income equalisation

deposits159GA to 159GDA

horticultural plants, establishment

costs of124ZZD to 124ZZR

substitute:

horticultural plants, establishment

costs of124ZZD to 124ZZR

income equalisation

deposits   159GA to 159GDA

Page 62 (line 4), after "electricity", insert "connections".

Clause 26-55, page 74 (after line 21), after paragraph (d), insert:

(e)   Division 3 of Part XII (Drought investment allowance), so far as it provides for deductions by a *leasing company.

Clause 28-115, page 89 (lines 17 and 18), omit the example, substitute:

Example:   If you keep a log book in 1997-98, you would need to keep the next one in 2002-2003, unless subsection (3) or (4) requires one sooner.

Clause 36-25, page 107 (after line 12), insert:

Clause 40-10, page 114 (line 15), omit "You", substitute "Depending on the kind of expenditure, you".

Clause 40-30,

Page 118 (after table item dealing with development allowance), insert:

Page 119 (table item dealing with electricity connections, column headed "What expenditure qualifies?"), omit "on land used or intended for use in producing assessable income", substitute "used or intended for use in a business for producing assessable income on land in Australia".

Page 119 (table item dealing with electricity connections, column headed "Who may deduct?"), omit "carrying on an assessable business on land in Australia", substitute "with an interest in the land".

Page 120 (table item dealing with grapevines, column headed "For more detail, see . . . "), omit "75D ", substitute "75AA ".

Page 120 (after table item dealing with grapevines), insert:

Page 122 (table item dealing with telephone lines, column headed "Who may deduct?"), omit "carrying on a primary production business", substitute "with an interest in the land".

Page 123 (table item dealing with timber mill buildings, column headed "Who may deduct?"), omit "operations", substitute "milling business".

Clause 41-15, page 126 (line 23), omit "1996-97", substitute "1997-98".

Clause 43-2,

Page 134 (graphic, Step 1), omit "30/6/96", substitute "30/6/97".

Page 134 (graphic, Step 1), omit "1/7/96", substitute "1/7/97".

Clause 43-55,

Page 141, (lines 13 to 17), omit paragraph (1)(a), substitute:

(a)   you entered into an *arrangement with:

      (i)   an entity to which paragraph 23(d), (e), (ea), (eb), (ec), (f), (g), (h), (j) or (k) of the Income Tax Assessment Act 1936 (dealing with *exempt income) applies; or

      (ii)   an STB (within the meaning of Division 1AB of Part III of that Act) whose *ordinary income and *statutory income is exempt from income tax;

      under which you were to pay an amount, or transfer property, directly or indirectly, to the entity; and

Page 141, (lines 25 to 27), omit subclause (2), substitute:

(2)   Subsection (1) applies to *arrangements entered into with an entity referred to in subparagraph (1)(a)(i) after 1 May 1980 that relate to deductions for *hotel buildings or *apartment buildings begun before 1 July 1997.

(3)   Subsection (1) also applies to *arrangements entered into with an entity referred to in subparagraph (1)(a)(ii) after 30 June 1994 that relate to deductions for *hotel buildings or *apartment buildings begun before 1 July 1997.

Clause 43-65, page 143 (line 3), omit "1 July 1996", substitute "1 July 1997".

Clause 43-75,

Page 144 (line 16), omit "30 June 1996", substitute "30 June 1997".

Page 144 (line 24), omit "1 July 1996", substitute "1 July 1997".

Clause 43-85, page 147, (line 6), omit "spec builders", substitute "speculative builders".

Clause 43-90, page 151 (table item "Time period 6", Column 1), omit "30/6/96", substitute "30/6/97".

Clause 43-95,

Page 151 (line 15), omit "1 July 1996", substitute "1 July 1997".

Page 152 (line 1), omit "30 June 1996", substitute "30 June 1997".

Page 152 (line 7), omit "1 July 1996", substitute "1 July 1997".

Page 152 (line 11), omit "30 June 1996", substitute "30 June 1997".

Clause 43-140,

Page 157 (table item "Time period 1", Column 1), omit "30/6/96", substitute "30/6/97".

Page 157 (table item "Time period 2", Column 1), omit "30/6/96", substitute "30/6/97".

Clause 43-145,

Page 160 (table item "Time period 1", Column 1), omit "30/6/96", substitute "30/6/97".

Page 162 (table item "Time period 2", Column 1), omit "30/6/96", substitute "30/6/97".

Clause 43-185, page 171 (line 16), omit "1 July 1996", substitute "1 July 1997".

Clause 165-10, page 186 (after line 10), at the end of the clause, add:

Note:   In the case of a listed public company or its 100% subsidiary, Subdivision 166-A modifies how this Subdivision applies, unless the company chooses otherwise.

Clause 165-35, page 193 (after line 17), after the existing note, add:

Note:   In the case of a listed public company or its 100% subsidiary, Subdivision 166-B modifies how this Subdivision applies, unless the company chooses otherwise.

Clause 165-170, page 209 (lines 1 to 6), omit the clause.

Clause 165-205,

Page 211 (lines 19 and 20), omit "someone as *legal personal representative of the person", substitute "the trustee of the person's estate".

Page 211 (line 21), after "owned", insert "beneficially".

Page 213 (after line 11), after Division 165, insert:

Division 166,Income tax consequences of changing ownership or control of a listed public company

Guide to Division 166

166-1 What this Division is about

Table of Subdivisions

166-A   Deducting tax losses of earlier income years

166-B      Working out the taxable income and tax loss for the income year of the change

166-D   Tests for finding out whether the listed public company has maintained the same owners

166-F   How to treat shareholdings of less than 1%

166-G   How to treat interposed superannuation funds, approved deposit funds and special companies

Subdivision 166-A,Deducting tax losses of earlier income years

Table of sections

166-5      How Subdivision 165-A applies to a listed public company

166-10   How Subdivision 165-A applies to a 100% subsidiary of a listed public company

166-15   Companies can choose that this Subdivision is not to apply to them

166-5 How Subdivision 165-A applies to a listed public company

(1)   This Subdivision modifies the way Subdivision 165-A applies to a company that is a *listed public company at all times during a period (the test period ) consisting of the *loss year, the income year and any intervening period.

   Note 1:   Subdivision 165-A is about the conditions a company must satisfy before it can deduct a tax loss for an earlier income year.

   Note 2:   This Subdivision also modifies how Subdivision 165-A applies to a 100% subsidiary of a listed public company: see section 166-10.

   Note 3:   A company can choose that this Subdivision is not to apply to it: see section 166-15.

   Substantial continuity of ownership

(2)   The *listed public company is taken to have met the conditions in section 165-12 (which is about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between the start of the *test period and each of these other times in the period:

   (a)   the time of each *abnormal trading in *shares in the company; and

   (b)   the end of each income year.

   See section 166-145 to work out whether there is substantial continuity of ownership.

   No substantial continuity of ownership

(3)   The *listed public company is taken to have failed to meet the conditions in section 165-12 if there is no *substantial continuity of ownership of the company as between the start of the *test period and one or more of the other times referred to in subsection (2).

   Satisfies the same business test

(4)   However, if the *listed public company satisfies the *same business test for the income year (the same business test period ), it is taken to have satisfied the condition in section 165-13 (which is about the company carrying on the same business).

   For the same business test: see Subdivision 165-E.

(5)   Apply the *same business test to the *business that the *listed public company carried on immediately before the first time (the test time ) covered by paragraph (2)(a) or (b) for which there was no *substantial continuity of ownership of the company as between the start of the test period and that time.

166-10 How Subdivision 165-A applies to a 100% subsidiary of a listed public company

(1)   This Subdivision also modifies the way Subdivision 165-A applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.

   Note:   Subdivision 165-A is about the conditions a company must satisfy before it can deduct a tax loss for an earlier income year.

(2)   The company (the subsidiary ) must be a *100% subsidiary of another company (the holding company ) at all times during a period consisting of:

   (a)   the *loss year of the subsidiary; and

   (b)   the income year of the subsidiary; and

   (c)   any intervening period.

(3)   Also, the *holding company must be a *listed public company at all times during that period.

(4)   If the conditions are met then, for the purposes of applying Subdivision 165-A to the subsidiary, this Subdivision applies to the subsidiary as if:

   (a)   the subsidiary were itself a *listed public company at all times during that period; and

   (b)   an *abnormal trading in *shares in the *holding company during that period were an abnormal trading in shares in the subsidiary.

   (Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)

166-15 Companies can choose that this Subdivision is not to apply to them

(1)   The *listed public company or subsidiary can choose that Subdivision 165-A is to apply to it for the income year without the modifications made by this Subdivision.

(2)   The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

Subdivision 166-B,Working out the taxable income and tax loss for the income year of the change

Table of sections

166-20   How Subdivision 165-B applies to a listed public company

166-25   How to work out the taxable income and tax loss

166-30   How Subdivision 165-B applies to a 100% subsidiary of a listed public company

166-35   Companies can choose that this Subdivision is not to apply to them

166-20 How Subdivision 165-B applies to a listed public company

(1)   This Subdivision modifies the way Subdivision 165-B applies to a company that is a *listed public company at all times during the income year (the test period ).

   Note 1:   Subdivision 165-B is about when a company must calculate its taxable income and tax loss for the income year in a special way.

   Note 2:   This Subdivision also modifies how Subdivision 165-B applies to a 100% subsidiary of a listed public company: see section 166-30.

   Note 3:   A company can choose that this Subdivision is not to apply to it: see section 166-20.

   No abnormal trading

(2)   If there is no *abnormal trading in *shares in the *listed public company during the *test period, it is taken to have met the condition in paragraph 165-35(a) (which is about there being persons having *more than a 50% stake in it during the whole of the income year).

   Abnormal trading, but substantial continuity of ownership

(3)   If there is *abnormal trading, but there is *substantial continuity of ownership of the company as between the start of the *test period and the time of each abnormal trading, the company is also taken to have met the condition in paragraph 165-35(a).

   See section 166-145 to work out whether there is substantial continuity of ownership.

   Abnormal trading without substantial continuity of ownership

(4)   If there is *abnormal trading, and there is no *substantial continuity of ownership of the company as between the start of the *test period and the time of the abnormal trading, the company is taken to have failed to meet the condition in paragraph 165-35(a).

   Satisfies the same business test

(5)   However, if the company satisfies the *same business test for the rest of the income year (the same business test period ) after the first *abnormal trading covered by subsection (4), it is taken to have satisfied the condition in paragraph 165-35(b) (which is about the company carrying on the same business).

   For the same business test: see Subdivision 165-E.

(6)   Apply the *same business test to the *business that the company carried on immediately before the time of the first *abnormal trading (the test time ) covered by subsection (4).

166-25 How to work out the taxable income and tax loss

(1)   If the *listed public company must calculate its taxable income and *tax loss for the income year under Subdivision 165-B, then, in dividing the income year into periods, apply subsection (2) instead of subsection 165-45(3).

(2)   The last period ends at the end of the income year. Each period (except the last) ends at the earlier of:

   (a)   the earliest time when there is an *abnormal trading in *shares in the *listed public company (except one covered by subsection (3)); or

   (b)   the earliest time when a person begins to control, or becomes able to control, the voting power in the *listed public company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:

      (i)   getting some benefit or advantage to do with how this Act applies; or

      (ii)   getting such a benefit or advantage for someone else.

(3)   In working out when a period ends, disregard an *abnormal trading if there is *substantial continuity of ownership of the company as between the start of the period and the time of the abnormal trading.

See section 166-145 to work out whether there is substantial continuity of ownership.

166-30 How Subdivision 165-B applies to 100% subsidiary of a listed public company

(1)   This Subdivision also modifies the way Subdivision 165-B applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.

   Note:   Subdivision 165-B is about when a company must calculate its taxable income and tax loss for the income year in a special way.

(2)   The company (the subsidiary ) must be a *100% subsidiary of another company (the holding company ) at all times during the income year of the subsidiary.

(3)   Also, the *holding company must be a *listed public company at all times during that income year.

(4)   If the conditions are met then, for the purposes of applying Subdivision 165-B to the subsidiary, this Subdivision applies to the subsidiary as if:

   (a)   the subsidiary were itself a *listed public company at all times during the income year; and

   (b)   an *abnormal trading in *shares in the *holding company during the income year were an abnormal trading in shares in the subsidiary.

   (Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)

166-35 Companies can choose that this Subdivision is not to apply to them

(1)   The *listed public company or subsidiary can choose that Subdivision 165-B is to apply to it for the income year without the modifications made by this Subdivision.

(2)   The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

   [The next Subdivision is Subdivision 166-D.]

Subdivision 166-D,Tests for finding out whether the listed public company has maintained the same owners

Guide to Subdivision 166-D

166-140 What this Subdivision is about

Note:   The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

Table of sections

Substantial continuity of ownership

166-145   Substantial continuity of ownership

The ownership tests

166-150   Who has more than 50% of the voting power in the listed public company at a particular time

166-155   Who has rights to more than 50% of the listed public company's dividends at a particular time

166-160   Who has rights to more than 50% of the listed public company's capital distributions at a particular time

Rules affecting the operation of the ownership tests

166-165   Rules in Division 165 apply

Substantial continuity of ownership

166-145 Substantial continuity of ownership

(1)   There is substantial continuity of ownership of the *listed public company as between the start of the *test period and another time in the test period if (and only if) the conditions in this section are met.

   Voting power

(2)   There must be persons (none of them companies) who had *more than 50% of the voting power in the *listed public company at the start of the *test period. Also, those persons must have had *more than 50% of the voting power in the *listed public company immediately after the other time in the test period.

To work out who had more than 50% of the voting power: see section 166-150.

   Rights to dividends

(3)   There must be persons (none of them companies) who had rights to *more than 50% of the *listed public company's *dividends at the start of the *test period. Also, those persons must have had rights to *more than 50% of the *listed public company's dividends immediately after the other time in the test period.

To work out who had rights to more than 50% of the listed public company's dividends: see section 166-155.

   Rights to capital distributions

(4)   There must be persons (none of them companies) who had rights to *more than 50% of the *listed public company's capital distributions at the start of the *test period. Also, those persons must have had rights to *more than 50% of the *listed public company's capital distributions immediately after the other time in the test period.

To work out who had rights to more than 50% of the listed public company's capital distributions: see section 166-160.

   When to apply the test

(5)   To work out whether a condition in this section was satisfied at a time (the ownership test time ), apply the ownership test for that condition.

The ownership tests

166-150 Who has more than 50% of the voting power in the listed public company at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the *ownership test time, between them control, or are able to control, the voting power in the *listed public company (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the listed public company at that time.

166-155 Who has rights to more than 50% of the listed public company's dividends at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the *ownership test time, have between them the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities) more than 50% of any *dividends that the *listed public company may pay, those persons have rights to more than 50% of the listed public company's dividends at that time.

166-160 Who has rights to more than 50% of the listed public company's capital distributions at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the *ownership test time, have between them the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities) more than 50% of any distribution of capital of the *listed public company, those persons have rights to more than 50% of the listed public company's capital distributions at that time.

Rules affecting the operation of the ownership tests

166-165 Rules in Division 165 apply

(1)   The rules in these sections also apply for the purposes of an ownership test in this Subdivision:

   165-175 (which is about how an ownership test can be satisfied by a single person);

   165-185 (which treats some *shares as never having carried rights);

   165-190 (which treats some *shares as always having carried rights);

   165-195 (which disregards redeemable *shares);

   165-200 (which is about how other rules do not affect how *shares or rights are counted);

   165-205 (which deals with deaths of beneficial owners).

(2)   The rule in section 165-180 (which is about arrangements affecting beneficial ownership of *shares) also applies for the purposes of an ownership test in this Subdivision as if the reference to a particular time during the ownership test period were a reference to the ownership test time.

   [The next Subdivision is Subdivision 166-F.]

Subdivision 166-F, How to treat shareholdings of less than 1%

Guide to Subdivision 166-F

166-215 What this Subdivision is about

Note 1:   The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

Note 2:   The rules in this Subdivision do not apply if they would hide a failure by the company to maintain the same owners: see sections 166-250 and 166-255.

Table of sections

Special tracing rules for listed public companies

   166-220   Shareholdings of less than 1% in the listed public company

   166-225   Shareholdings of less than 1% in an interposed listed public company

   166-230   Notional shareholder

   166-235   Notional shareholder taken to have minimum voting control, dividend rights and capital rights

   166-240   Voting, dividend and capital shareholding of less than 1%

   166-245   Shares that are part of a substantial shareholding

When the rules in this Subdivision do not apply

166-250   Limit on listed public company splitting its shares into different classes

166-255   If listed public company would not have otherwise passed the ownership tests

Special tracing rules for listed public companies

166-220 Shareholdings of less than 1% in the listed public company

This Subdivision modifies how the ownership tests are applied to the *listed public company (the head company ) if the company has:

   (a)   *voting shareholdings of less than 1%; or

   (b)   *dividend shareholdings of less than 1%; or

   (c)   *capital shareholdings of less than 1%.

For the ownership tests: see sections 166-150, 166-155 and 166-160.

166-225 Shareholdings of less than 1% in an interposed listed public company

(1)   This Subdivision also modifies how the ownership tests are applied to the *head company if another *listed public company (the interposed company ) meets the conditions in subsections (2) and (3).

For the ownership tests: see sections 166-150, 166-155 and 166-160.

(2)   The *interposed company must be interposed between the *head company and persons (none of them companies) who:

   (a)   control (or are able to control) voting power in the head company indirectly through the interposed company; or

   (b)   have the right to receive, for their own benefit and *indirectly through the interposed company, any *dividends the head company may pay; or

   (c)   have the right to receive, for their own benefit and *indirectly through the interposed company, any distributions of capital of the head company.

(3)   The *interposed company must have:

   (a)   *voting shareholdings of less than 1%; or

   (b)   *dividend shareholdings of less than 1%; or

   (c)   *capital shareholdings of less than 1%.

166-230 Notional shareholder

Notional shareholder of the head company

(1)   The ownership tests in sections 166-150, 166-155 and 166-160 are applied to the *head company as if, at the *ownership test time, a single notional entity (the notional shareholder ):

   (a)   directly controlled the voting power in the head company that is carried by each *voting shareholding of less than 1% in the company at that time; and

   (b)   had the right to receive, for its own benefit and directly:

      (i)   any *dividends the head company may pay in respect of each *dividend shareholding of less than 1% in the company at that time; and

      (ii)   any distributions of capital of the head company in respect of each *capital shareholding of less than 1% in the company at that time; and

   (c)   were a person (other than a company).

Notional shareholder of the interposed company

(2)   The tests are also applied to the *head company as if, at the *ownership test time, for each *interposed company, a different single notional entity (the notional shareholder ):

   (a)   directly controlled the voting power in the interposed company that is carried by each *voting shareholding of less than 1% in the interposed company at that time; and

   (b)   had the right to receive, for its own benefit and directly:

      (i)   any *dividends the interposed company may pay in respect of each *dividend shareholding of less than 1% in the interposed company at that time; and

      (ii)   any distributions of capital of the interposed company in respect of each *capital shareholding of less than 1% in the interposed company at that time; and

   (c)   were a person (other than a company).

   Persons who actually control or have rights are not taken to

(3)   The tests are also applied to the *head company as if, at the *ownership test time:

   (a)   the persons (other than companies) who control (or are able to control) the voting power in the head company or interposed company (whether directly, or indirectly through one or more interposed entities) that is carried by each *voting shareholding of less than 1% in the company had not had that control; and

   (b)   the persons (other than companies) who have the right to receive for their own benefit (whether directly, or *indirectly through one or more interposed entities):

      (i)   any *dividends that the head company or interposed company may pay in respect of each *dividend shareholding of less than 1% in the company; and

      (ii)   any distributions of capital of the head company or interposed company in respect of each *capital shareholding of less than 1% in the company;

      had not had that right.

166-235 Notional shareholder taken to have minimum voting control, dividend rights and capital rights

Minimum control of voting power

(1)   If the *ownership test time is after the start of the *test period and:

   the voting power in the *head company or *interposed company that the *notional shareholder controls at that time;

   is greater than:

   the voting power in the company that the notional shareholder controlled at the start of that period;

   the notional shareholder is taken to control voting power in the company at that time only to the extent that it controlled it at the start of that period.

Minimum percentage of rights to dividends and capital

(2)   If the *ownership test time is after the start of the *test period and:

   the percentage of the *dividends or distributions of capital of the *head company or *interposed company that the *notional shareholder has the right to receive at that time;

   is greater than:

   the percentage (the lower percentage ) of the dividends or distributions of capital of the company that the notional shareholder had the right to receive at the start of that period;

   the notional shareholder is taken to have the right to receive the lower percentage of the dividends or distributions of capital at that time.

166-240 Voting, dividend and capital shareholding of less than 1%

Meaning of voting shareholding of less than 1%

(1)   If all the *shares in the *head company or *interposed company of which an entity is the registered holder at the *ownership test time carry (between them) less than 1% of the voting power in the company, those shares (except shares that are *part of a substantial shareholding) constitute a voting shareholding of less than 1% in the company at that time.

Meaning of dividend shareholding of less than 1%

(2)   If all the *shares in the *head company or *interposed company of which an entity is the registered holder at the *ownership test time carry (between them) the right to receive less than 1% of any *dividends that the company may pay, those shares (except shares that are *part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.

Meaning of capital shareholding of less than 1%

(3)   If all the *shares in the *head company or *interposed company of which an entity is the registered holder at the *ownership test time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are *part of a substantial shareholding) constitute a capital shareholding of less than 1% in the company at that time.

166-245   Shares that are part of a substantial shareholding

(1)   *Shares in a company begin to be part of a substantial shareholding of a person when the person gives the company:

   (a)   a notice under section 709 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a *relevant interest in the shares as at the day when the person became a substantial shareholder in the company; or

   (b)   a notice under section 710 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a *relevant interest in the shares after the change in relevant interests because of which the notice had to be given;

   whichever happens first.

(2)   The *shares stop being part of the substantial shareholding when the person gives the company:

   (a)   a notice under section 710 of the Corporations Law from which it appears that neither the person nor an associate (within the meaning of that section) had a *relevant interest in the shares after the change in relevant interests because of which the notice had to be given; or

   (b)   a notice under section 711 of the Corporations Law from which it appears that the person has stopped being a substantial shareholder in the company;

whichever happens first.

When the rules in this Subdivision do not apply

166-250 Limit on listed public company splitting its shares into different classes

This Subdivision does not apply unless, at the *ownership test time, all the *voting shares in the *head company carry (between them):

   (a)   the right to receive more than 75% of any *dividends the head company may pay; and

   (b)   the right to receive more than 75% of any distributions of capital of the head company.

166-255 If listed public company would not have otherwise passed the ownership tests

This Subdivision does not apply for the purposes of section 166-5 or 166-20 if the Commissioner considers it reasonable to assume that the *head company would not meet the conditions in that section if it were not for the rules in this Subdivision.

   Note:   The conditions in sections 166-5 and 166-20 require the listed public company to maintain the same owners at each ownership test time during the test period.

Subdivision 166-G, How to treat interposed superannuation funds, approved deposit funds and special companies

Guide to this Subdivision

166-260 What this Subdivision is about

   Note:   The rules in this Subdivision also apply to a company that is a 100% subsidiary of a listed public company: see sections 166-10 and 166-30.

Table of sections

Special tracing rules for listed public companies

166-265   When fund or special company is taken to control voting power

166-270   When fund or special company is taken to have rights to dividends and capital

Special tracing rules for listed public companies

166-265 When fund or special company is taken to control voting power

(1)   This section modifies how the ownership test in section 166-150 (about control of voting) is applied to the *listed public company if:

   (a)   a *superannuation fund, *approved deposit fund or *special company is interposed, at the *ownership test time, between persons (none of them companies) and the listed public company; and

   (b)   at the ownership test time, those persons control (or are able to control) any of the voting power in the listed public company indirectly through the fund or special company (or through entities including it); and

   (c)   the fund or special company is a *complying superannuation fund, *complying approved deposit fund or special company at all times during the income year of the listed public company in which the *ownership test time occurs.

If fund or special company has more than 50 members

(2)   If the fund or *special company has more than 50 *members, the test is applied as if, at the *ownership test time, the fund or special company were a person (other than a company) who controlled the voting power in the *listed public company that those persons control (or are able to control).

If fund or special company has 50 members or less

(3)   However, if the fund or *special company has 50 *members or less, the test is applied as if, at the *ownership test time, each member were a person (other than a company) who controlled an equal proportion of the voting power in the *listed public company that those persons control (or are able to control).

Persons who actually control are taken not to control

(4)   The test is applied as if, at the *ownership test time, the voting power in the *listed public company that those persons control (or are able to control) were not controlled by them (except as provided by subsection (3)).

166-270 When fund or special company is taken to have rights to dividends and capital

(1)   This section modifies how the ownership test in section 166-155 (about *dividend rights) or 166-160 (about capital rights) is applied to the *listed public company if:

   (a)   a *superannuation fund, *approved deposit fund or *special company is interposed, at the *ownership test time, between persons (none of them companies) and the listed public company; and

   (b)   at the ownership test time, those persons have the right to receive for their own benefit, and *indirectly through the fund or special company (or through entities including it):

      (i)   a percentage of any *dividends that the listed public company may pay; or

      (ii)   a percentage of any distributions of capital of the listed public company; and

   (c)   the fund or special company is a *complying superannuation fund, *complying approved deposit fund or special company at all times during the income year of the listed public company in which the *ownership test time occurs.

If fund or special company has more than 50 members

(2)   If the fund or *special company has more than 50 *members, the test is applied as if, at the *ownership test time, the fund or special company were a person (other than a company) who had the right to receive, for the person's own benefit, that percentage of those *dividends or distributions of capital of the *listed public company.

If fund or special company has 50 members or less

(3)   However, if the fund or *special company has 50 *members or less, the test is applied as if, at the *ownership test time, each member were a person (other than a company) who had a right to receive, for the person's own benefit, an equal proportion of those *dividends or distributions of capital.

Persons who actually have the right are taken not to have it

(4)   The test is applied as if, at the *ownership test time, the persons (other than companies) who have the right to receive that percentage of those *dividends or distributions of capital did not have that right (except as provided by subsection (3)).

Clause 330-15, page 238 (line 11), omit "1996-97", substitute "1997-98".

Clause 330-60, page 243 (line 9), omit "1996-97", substitute "1997-98".

Clause 330-80,

Page 246 (line 18), omit "1996-97", substitute "1997-98".

Page 246 (line 26), omit "1995-96", substitute "1996-97".

Page 246 (line 27), omit "1996-97", substitute "1997-98".

Clause 330-95, page 248 (lines 29 and 30), omit paragraph (1)(a), substitute:

   (a)   *plant;

Clause 330-110, page 253 (line 11), omit "1996-97", substitute "1997-98".

Clause 330-310,

Page 270 (line 5), omit "1996-97", substitute "1997-98".

Page 270 (line 7), omit "1997-98", substitute "1998-99".

Page 270 (line 10), omit "1998-99", substitute "1999-2000".

Page 270 (line 18), omit "1995-96", substitute "1996-97".

Page 270 (line 20), omit "1996-97", substitute "1997-98".

Page 270 (line 23), omit "1995-96", substitute "1996-97".

Page 270 (line 26), omit "1996-97", substitute "1997-98".

Clause 330-350, page 274 (line 13), omit "1996-97", substitute "1997-98".

Clause 330-370,

Page 276 (line 2), omit "1996-97", substitute "1997-98".

Page 276 (line 10), omit "1995-96", substitute "1996-97".

Page 276 (line 11), omit "1996-97", substitute "1997-98".

Clause 330-435, page 281 (line 20), omit "1996-97", substitute "1997-98".

Clause 330-495,

Page 288 (lines 22 to 24), omit "(of a kind that qualifies for a deduction under this Division, or qualified for a deduction under a corresponding previous law)".

Page 288 (lines 29 and 30), omit note 1.

Clause 330-545, page 292 (line 7), omit "1996-97", substitute "1997-98".

Clause 900-95, page 326 (lines 11 and 12), omit "*salary and wages", substitute "salary or wages".

Page 346 (after line 2), in Division 960, insert:

Subdivision 960-E,Entities

Page 347 (after line 8), after clause 960-100, insert:

[The next Subdivision is Subdivision 960-H.]

Subdivision 960-H,Abnormal trading in shares or units

Table of sections

   960-220   Meaning of trading

   960-225   Abnormal trading

   960-230   Abnormal trading,5% of shares or units in one transaction

   960-235   Abnormal trading,suspected 5% of shares or units in a series of transactions

   960-240   Abnormal trading,suspected acquisition or merger

   960-245   Abnormal trading,20% of shares or units traded over 60 day period

960-220 Meaning of trading

There is a trading in *shares in a *listed public company, or in units in a unit trust, if there is an issue, redemption or transfer of, or any other dealing in, those shares or units.

960-225 Abnormal trading

(1)   There is an abnormal trading in *shares in a *listed public company, or in units in a unit trust, if a *trading in the shares or units is abnormal having regard to all relevant factors, including these:

   (a)   the timing of the trading, when compared with the normal timing for trading in the company's shares or in the trust's units;

   (b)   the number of shares or units traded, when compared with the normal number of the company's shares, or the trust's units, traded;

   (c)   any connection between the trading and any other trading in the company's shares or in the trust's units;

   (d)   any connection between the trading and a *tax loss or other deduction of the company or trust.

(2)   There may also be an abnormal trading under any of the following provisions.

960-230 Abnormal trading,5% of shares or units in one transaction

There is an abnormal trading in *shares in a *listed public company, or in units in a unit trust, if 5% or more of the shares or units are *traded in one transaction.

960-235 Abnormal trading,suspected 5% of shares or units in a series of transactions

(1)   There is an abnormal trading in *shares in a *listed public company, or in units in a unit trust, if the company or trustee knows or reasonably suspects that an entity (or an entity and one or more of the entity's *associates) has acquired (or redeemed) 5% or more of the shares or units in 2 or more transactions and would not have done so if the company or trust did not have a *tax loss or other deduction.

Time when abnormal trading happens

(2)   The *abnormal trading happens at the time of the particular transaction that causes the 5% figure to be exceeded.

960-240 Abnormal trading,suspected acquisition or merger

There is an abnormal trading in *shares in a *listed public company, or in units in a unit trust, if a *trading in those shares or units happens which the company or trustee knows or reasonably suspects is part of an acquisition or merger of the company with another company, or of the trust with another trust.

960-245 Abnormal trading,20% of shares or units traded over 60 day period

(1)   There is an abnormal trading in *shares in a *listed public company or units in a unit trust if more than 20% of the shares or units are *traded during a 60 day period.

Time when abnormal trading happens

(2)   The *abnormal trading happens at the end of the 60 day period concerned.

Clause 995-1,

Page 351 (after line 7), after the definition of 100% subsidiary , insert:

abnormal trading has the meaning given by Subdivision 960-H.

Page 351 (after line 18), after the definition of apartment building , insert:

approved deposit fund has the meaning given by section 10 of the Superannuation Industry (Supervision) Act 1993.

approved stock exchange has the meaning given by section 470 of the Income Tax Assessment Act 1936.

Page 352 (line 3), omit "1996-97", substitute "1997-98".

Page 353 (after line 2), after the definition of capital allowance , insert:

capital shareholding of less than 1% has the meaning given by section 166-240.

Page 353 (after line 9), after the definition of cash bidding exploration or prospecting authority , insert:

club means a company that was established or is carried on mainly to provide facilities, for the use or benefit of its *members, for drinking, dining, *recreation or entertainment.

Page 353 (after line 17), after the definition of company , insert:

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.

Page 354 (line 5), omit "1996-97", substitute "1997-98".

Page 354 (after line 10), after the definition of dividend , insert:

dividend shareholding of less than 1% has the meaning given by section 166-240.

Page 355 (line 20), omit "1996-97", substitute "1997-98".

Page 356 (line 6), omit "1995-96", substitute "1996-97".

Page 356 (after line 21), after the definition of Guide , insert:

head company has the meaning given by section 166-220.

Page 358 (line 4), omit "1997, or the 1996-97", substitute "1998, or the 1997-98".

Page 358 (after line 10), after the definition of income year , insert:

indirectly : persons have the right to receive *dividends or 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 or distribute the dividends or capital; and

(b)   the dividends or capital were then successively paid or distributed by each entity interposed between the company and those persons.

Page 358 (after line 20), after the definition of instalment of petroleum resource rent tax , insert:

interposed company has the meaning given by section 166-225.

Page 358 (line 22), after "82AQ" insert "or 680, as appropriate,".

Page 359 (after line 2), after the definition of legal personal representative , insert:

listed public company means a company that satisfies all of these conditions:

(a)   any of the *shares (except shares that carry a right to a fixed rate of *dividend) in the company are listed for quotation in the official list of an *approved stock exchange;

(b)   more than 20 persons (none of them companies) between them control, or are able to control, 75% or more of voting power in the company (whether directly, or indirectly through one or more interposed entities);

(c)   more than 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 entities) 75% or more of any *dividends that the company may pay;

(d)   more than 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 entities) 75% or more of any distribution of capital of the company.

Page 359 (after line 23), after the definition of more than 50% of the company's dividends , insert:

more than 50% of the listed public company's capital distributions has the meaning given by section 166-160.

more than 50% of the listed public company's dividends has the meaning given by section 166-155.

Page 360 (after line 2), after the definition of more than 50% of the voting power , insert:

more than 50% of the voting power in the listed public company has the meaning given by section 166-150.

Page 360 (after line 4), after the definition of motor vehicle , insert:

mutual affiliate company has the meaning given by section 121AC of the Income Tax Assessment Act 1936.

mutual insurance company has the meaning given by section 121AB of the Income Tax Assessment Act 1936.

Page 360 (after line 12), after the definition of notional loss , insert:

notional shareholder has the meaning given by section 166-230.

Page 360 (after line 17), after the definition of ownership test period , insert:

ownership test time has the meaning given by section 166-145.

Page 360 (after line 20), after the definition of partnership , insert:

part of a substantial shareholding has the meaning given by section 166-245.

Page 362 (after line 12), after the definition of quasi-ownership right , insert:

recreation includes amusement, sport or similar leisure-time pursuits.

Page 362 (after line 25), after the definition of relative , insert:

relevant interest has the meaning given by Division 5 of Part 1.2 of the Corporations Law.

Page 363 (lines 5 and 6), omit the definition of same business test period , substitute:

same business test period has the meaning given by sections 165-13, 165-15, 165-35, 165-40, 165-45, 166-5 and 166-20.

Page 363 (after line 13), after the definition of shareholding interest , insert:

special company means:

(a)   a *mutual affiliate company; or

(b)   a *mutual insurance company; or

(c)   a trade union registered under an *Australian law; or

(d)   a *sporting club; or

(e)   a company that is prescribed by the regulations.

Page 363 (after line 14), after the definition of specific deduction , insert:

sporting club means a society, association or *club that:

(a)   is established for the encouragement of sport or a game; and

(b)   is not carried on for profit to its members.

Page 363 (after line 19), after the definition of statutory income , insert:

substantial continuity of ownership has the meaning given by section

substantial shareholding : see part of a substantial shareholding .

   superannuation fund has the meaning given by section 10 of the Superannuation Industry (Supervision) Act 1993. ~

Page 364 (line 8), omit "1995-96", substitute "1996-97".

Page 364 (after line 19), after the definition of Territory law , insert:

test period has the meaning given by sections 166-5 and 166-20.

Page 365 (lines 1 and 2), omit the definition of test time , substitute:

test time has the meaning given by sections 165-13, 165-40, 165-45, 166-5, 166-20 and 330-175.

Page 365 (after line 11), after the definition of this Act , insert:

trading in *shares in a *listed public company, or in units in a unit trust, has the meaning given by section 960-220.

Page 366 (after line 2), after the definition of unrecouped expenditure , insert:

voting shareholding of less than 1% has the meaning given by section 166-240.

voting share in a company means:

(a)   if the company is a body corporate,a voting share as defined by section 9 of the Corporations Law; and

(b)   otherwise,a share that would be a voting share as defined by that section if the company were a body corporate.

Amendments agreed to.

Bill, as amended, agreed to.