(i) contributions made by any person to a foreign superannuation fund to obtain the pension; and
(ii) so much as the Commissioner considers reasonable of contributions made by any person to a foreign superannuation fund to obtain superannuation benefits including the pension; and
(b) in relation to an annuity other than a pension—the sum of:
(i) payments made solely to purchase the annuity; and
(ii) so much as the Commissioner considers reasonable of payments made to purchase the annuity and to obtain other benefits.
relevant number, in relation to an annuity in relation to a year of income, means:
(a) where the annuity is payable for a term of years certain—the number of years in the term;
(b) where the annuity is payable during the lifetime of a person and not thereafter—the life expectation factor of the person; and
(c) in any other case—the number that the Commissioner considers appropriate having regard to the number of years in the total period during which the annuity will be, or may reasonably be expected to be, payable.
relevant share, in relation to an annuity derived by a taxpayer during a year of income, means:
(a) in a case where the annuity derived by the taxpayer is a share of an annuity (which annuity is in this paragraph referred to as the total annuity) payable to the taxpayer and another person or other persons—the fraction ascertained by dividing the number of whole dollars in the amount of the annuity derived by the taxpayer during the year of income by the number of whole dollars in the amount of the total annuity derived during the year of income by the taxpayer and the other person or persons; or
(b) in any other case—the number 1.
residual capital value, in relation to an annuity, means the capital amount payable on the termination of the annuity.
undeducted purchase price, in relation to an annuity, has the meaning given by section 27A immediately before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007.
(5) In the definition of purchase price in subsection (4):
(a) a reference to contributions made by any person to a foreign superannuation fund to obtain a pension does not include a reference to contributions made to a foreign superannuation fund by an employer, or by another person under an agreement to which the employer is a party, for the purpose of providing superannuation benefits for, or for dependants of, an employee of the employer; and
(b) a reference to payments made to purchase, or solely to purchase, an annuity (other than a pension) does not include a reference to payments made by an employer, or by another person under an agreement to which the employer is a party, to purchase, or solely to purchase, the annuity for, or for dependants of, an employee of the employer.
(6) For the purposes of subsection (5), in determining whether a person is an employer of another person, treat the holding of an office by the other person as employment of that person.
Subdivision D—Dividends
43A Subdivision has effect subject to provisions of Division 216 of the Income Tax Assessment Act 1997
This Subdivision has effect subject to the provisions of Division 216 of the Income Tax Assessment Act 1997 (which describes cum dividend sales in which a distribution to a member of a corporate tax entity is treated as having been made to someone else).
43B Application of Subdivision to non‑share dividends
(1) This Subdivision:
(a) applies to a non‑share equity interest in the same way as it applies to a share; and
(b) applies to an equity holder in the same way as it applies to a shareholder; and
(c) applies to a non‑share dividend in the same way as it applies to a dividend.
(2) Subsection (1) does not apply to section 47A.
(3) Paragraph (1)(c) does not apply to subsection 44(1).
(4) Subsection (1) has effect subject to the special provision that is made for non‑share dividends in subsection 44(1).
44 Dividends
(1) The assessable income of a shareholder in a company (whether the company is a resident or a non‑resident) includes:
(a) if the shareholder is a resident:
(i) dividends (other than non‑share dividends) that are paid to the shareholder by the company out of profits derived by it from any source; and
(ii) all non‑share dividends paid to the shareholder by the company; and
(b) if the shareholder is a non‑resident:
(i) dividends (other than non‑share dividends) paid to the shareholder by the company to the extent to which they are paid out of profits derived by it from sources in Australia; and
(ii) non‑share dividends paid to the shareholder by the company to the extent to which they are derived from sources in Australia; and
(c) if the shareholder is a non‑resident carrying on business in Australia at or through a permanent establishment of the shareholder in Australia, and the company is a resident:
(i) dividends (other than non‑share dividends) that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are paid out of profits derived by the company from sources outside Australia; and
(ii) non‑share dividends that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are derived from sources outside Australia.
This subsection does not apply to a dividend (or non‑share dividend) to the extent to which another provision of this Act that expressly deals with dividends includes some or all of the dividend (or non‑share dividend) in, or excludes some or all of the dividend (or non‑share dividend) from, the shareholder’s assessable income.
Note 1: Some other provisions that expressly deal with dividends are sections 23AI, 23AK and 128D of this Act and section 768‑5 of the Income Tax Assessment Act 1997.
Note 2: An amount declared to be conduit foreign income is not included in assessable income under paragraph (1)(b) or (c): see section 802‑15 of the Income Tax Assessment Act 1997.
(1A) For the purposes of this Act, a dividend paid out of an amount other than profits is taken to be a dividend paid out of profits.
(1B) Where:
(a) the amount of the moneys or of the value of other property of which a dividend paid by a company consists is debited against an amount standing to the credit of a share capital account of the company; or
(b) a dividend paid by a company is a repayment by the company of an amount paid‑up on a share;
the dividend shall, for the purposes of this section, be deemed to have been paid by the company out of profits derived by it.
(2) Subsections (3) and (4) apply to a demerger dividend unless the head entity elects in writing, within one month after it decides which of its shareholders will receive ownership interests in the demerged entity under the demerger, that those subsections do not apply to the total demerger dividend for all shareholders.
(3) This section applies to the demerger dividend as if it had not been paid out of profits.
(4) A demerger dividend is not assessable income or exempt income.
(5) However, subsections (3) and (4) do not apply to a demerger dividend unless, just after the demerger, CGT assets owned by the demerged entity or a demerger subsidiary representing at least 50% by market value of all the CGT assets (or a reasonable approximation of market value) owned by the demerged entity and its demerger subsidiaries are used, directly or indirectly, in one or more businesses carried on by one or more of those entities.
(6) In applying subsection (5), disregard any assets that are ownership interests in a demerger subsidiary unless they are used in a business referred to in that subsection.
(7) In this section:
permanent establishment of a person:
(a) has the same meaning as in a double tax agreement (as defined in Part X) that relates to a foreign country and affects the person; or
(b) has the meaning given by subsection 6(1), if there is no such agreement.
45 Streaming of bonus shares and unfranked dividends
Application of section
(1) This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of shares (other than shares to which subsection 6BA(5) applies) and the payment of minimally franked dividends to its shareholders in such a way that:
(a) the shares are received by some shareholders but not all shareholders; and
(b) some or all of the shareholders who do not receive the shares receive or will receive minimally franked dividends.
(2) The value of the share at the time that the shareholder is provided with the share is taken, for the purposes of this Act, to be a dividend that is unfrankable (within the meaning of subsection 995‑1(1) of the Income Tax Assessment Act 1997) and that is paid by the company, out of profits of the company, to the shareholder at that time.
(3) A dividend is minimally franked if it is not franked, or is franked to less than 10%, in accordance with section 202‑5 or 208‑60 of the Income Tax Assessment Act 1997.
45A Streaming of dividends and capital benefits
Application of section
(1) This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of capital benefits and the payment of dividends to its shareholders in such a way that:
(a) the capital benefits are, or apart from this section would be, received by shareholders (the advantaged shareholders) who would, in the year of income in which the capital benefits are provided, derive a greater benefit from the capital benefits than other shareholders; and
(b) it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received, or will receive, dividends.
However, it does not apply if section 45 applies in relation to the streaming or in the circumstances set out in subsection (5).
Commissioner to determine that section 45C applies
(2) The Commissioner may make, in writing, a determination that section 45C applies in relation to the whole, or a part, of the capital benefits. A determination does not form part of an assessment.
Note: Subsection (6) limits the determination to a part of the capital benefit in certain cases.
Meaning of provision of capital benefit
(3) A reference to the provision of a capital benefit to a shareholder in a company is a reference to any of the following:
(a) the provision to the shareholder of shares in the company;
(b) the distribution to the shareholder of share capital or share premium;
(c) something that is done in relation to a share that has the effect of increasing the value of a share (which may or may not be the same share) held by the shareholder.
(3A) For the purposes of this section, a non‑share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non‑share capital return.
Meaning of greater benefit from capital benefits
(4) The circumstances in which a shareholder would, in a year of income, derive a greater benefit from capital benefits than another shareholder include, but are not limited to, any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder:
(a) some or all of the shares in the company held by the shareholder were acquired, or are taken to have been acquired, before 20 September 1985;
(b) the shareholder is a non‑resident;
(c) the cost base (for the purposes of Part IIIA) of the relevant share is not substantially less than the value of the applicable capital benefit;
(d) the shareholder has a net capital loss for the year of income in which this capital benefit is provided;
(e) the shareholder is a private company who would not have been entitled to a rebate under former section 46F if the shareholder had received the dividend that was paid to the disadvantaged shareholder;
(f) the shareholder has income tax losses.
Certain capital benefits not covered
(5) This section does not apply where the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, fully franked dividends.
Determination limited in certain cases
(6) If the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, partly franked dividends, the Commissioner may only make a determination under subsection (2) in relation to so much of the capital benefit as the Commissioner considers relates to the unfranked part of the dividend.
45B Schemes to provide certain benefits
Purpose of section
(1) The purpose of this section is to ensure that relevant amounts are treated as dividends for taxation purposes if:
(a) components of a demerger allocation as between capital and profit do not reflect the circumstances of a demerger; or
(b) certain payments, allocations and distributions are made in substitution for dividends.
Application of section
(2) This section applies if:
(a) there is a scheme under which a person is provided with a demerger benefit or a capital benefit by a company; and
(b) under the scheme, a taxpayer (the relevant taxpayer), who may or may not be the person provided with the demerger benefit or the capital benefit, obtains a tax benefit; and
(c) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling a taxpayer (the relevant taxpayer) to obtain a tax benefit.
Commissioner to determine that section 45BA or 45C applies
(3) The Commissioner may make, in writing, a determination that:
(a) section 45BA applies in relation to the whole, or a part, of the demerger benefit; or
(b) section 45C applies in relation to the whole, or a part, of the capital benefit.
A determination does not form part of an assessment.
Note: If section 45BA applies in relation to the whole, or a part, of a demerger benefit, this benefit may be a capital benefit.
Meaning of provided with a demerger benefit
(4) A person is provided with a demerger benefit if in relation to a demerger:
(a) a company provides the person with ownership interests in that or another company; or
(b) something is done in relation to an ownership interest owned by the person that has the effect of increasing the value of an ownership interest (which may or may not be the same ownership interest) owned by the person.
Meaning of provided with a capital benefit
(5) A reference to a person being provided with a capital benefit is a reference to any of the following:
(a) the provision of ownership interests in a company to the person;
(b) the distribution to the person of share capital or share premium;
(c) something that is done in relation to an ownership interest that has the effect of increasing the value of an ownership interest (which may or may not be the same interest) that is held by the person.
(6) However, a person is not provided with a capital benefit to the extent that the provision of interests, the distribution or the thing done referred to in subsection (5) involves the person receiving a demerger dividend.
(7) For the purposes of this section, a non‑share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non‑share capital return.
Meaning of relevant circumstances of scheme
(8) The relevant circumstances of a scheme include the following:
(a) the extent to which the demerger benefit or capital benefit is attributable to capital or the extent to which the demerger benefit or capital benefit is attributable to profits (realised and unrealised) of the company or of an associate (within the meaning in section 318) of the company;
(b) the pattern of distributions of dividends, bonus shares and returns of capital or share premium by the company or by an associate (within the meaning in section 318) of the company;
(c) whether the relevant taxpayer has capital losses that, apart from the scheme, would be unutilised (within the meaning of the Income Tax Assessment Act 1997) at the end of the relevant year of income;
(d) whether some or all of the ownership interests in the company or in an associate (within the meaning in section 318) of the company held by the relevant taxpayer were acquired, or are taken to have been acquired, by the relevant taxpayer before 20 September 1985;
(e) whether the relevant taxpayer is a non‑resident;
(f) whether the cost base (for the purposes of the Income Tax Assessment Act 1997) of the relevant ownership interest is not substantially less than the value of the applicable demerger benefit or capital benefit;
(h) if the scheme involves the distribution of share capital or share premium—whether the interest held by the relevant taxpayer after the distribution is the same as the interest would have been if an equivalent dividend had been paid instead of the distribution of share capital or share premium;
(i) if the scheme involves the provision of ownership interests and the later disposal of those interests, or an increase in the value of ownership interests and the later disposal of those interests:
(i) the period for which the ownership interests are held by the holder of the interests; and
(ii) when the arrangement for the disposal of the ownership interests was entered into;