(3) The Division 6E net income, of the trust estate, is the net income of the trust estate worked out on the assumption that the things mentioned in paragraph 102UW(b) were disregarded. The Division 6E net income of the trust estate cannot be less than nil.
(4) A beneficiary of the trust estate has an amount of a Division 6E present entitlement to the income of the trust estate that is equal to the amount of the beneficiary’s present entitlement to the income of the trust estate, decreased by:
(a) for each capital gain taken into account as mentioned in paragraph 102UW(b)—so much of the beneficiary’s share of the capital gain as was included in the income of the trust estate; and
(b) for each franked distribution taken into account as mentioned in paragraph 102UW(b)—so much of the beneficiary’s share of the franked distribution as was included in the income of the trust estate.
(5) The following expressions in this Division have the same meaning as in the Income Tax Assessment Act 1997:
(a) share of a capital gain (see section 115‑227 of that Act);
(b) share of a franked distribution (see section 207‑55 of that Act).
Division 7—Private companies
102V Application of Division to non‑share dividends
(1) This Division:
(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 103A.
103 Interpretation
(1) In this Division, unless the contrary intention appears:
the relevant holding company or holding companies, in relation to another company in relation to a year of income of that other company, means:
(a) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4)—the public company or public companies referred to in paragraph 103A(4)(a); or
(b) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4B)—the listed company or listed companies referred to in paragraphs 103A(4B)(a) and (b).
(2) For the purposes of this Division, a person is the nominee of another person in relation to shares if that first‑mentioned person may be required to exercise his or her voting power in relation to those shares at the direction of, or holds those shares directly or indirectly on behalf of or for the benefit of, that second‑mentioned person.
(3) For the purposes of this Division, shares in a company shall be deemed to be held indirectly on behalf of or for the benefit of a person (not being a private company, trustee or partnership) if, in the event of the payment of a dividend on those shares, that person would, otherwise than as a shareholder of the company, receive the whole or a part of that dividend if there were successive distributions of the relative parts of that dividend to and by each of any private companies, trustees or partnerships interposed between the company paying the dividend and that person.
(4) For the purposes of this Division, a company shall be taken to have been a listed company during a period that was included in a year of income of another company (in this subsection referred to as the relevant year of income) where:
(a) if the period was included in the year of income of the first‑mentioned company (in this subsection referred to as the corresponding year of income) that corresponded with the relevant year of income—the first‑mentioned company was by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to the corresponding year of income; or
(b) if the period was included in the year of income of the first‑mentioned company that immediately preceded or immediately followed the corresponding year of income—the first‑mentioned company was, by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to that preceding or following year of income, as the case may be.
(5) A reference in this Division to a right, power, option, agreement or instrument shall be read as including a reference to a right, power, option, agreement or instrument that is not enforceable by legal proceedings whether or not it was intended to be so enforceable.
(6) For the purposes of this Division, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.
103A Private companies
(1) For the purposes of this Division, a company is a private company in relation to the year of income if the company is not a public company in relation to the year of income.
(2) For the purposes of subsection (1), a company is, subject to the succeeding provisions of this section, a public company in relation to the year of income if:
(a) shares in the company, not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits, were listed for quotation in the official list of a stock exchange, being a stock exchange in Australia or elsewhere, as at the last day of the year of income;
(b) at all times during the year of income, the company was a co‑operative company as defined by section 117;
(c) the company has not, at any time since its formation, been carried on for the purposes of profit or gain to its individual members and was, at all times during the year of income, prohibited by the terms of its constituent document from making any distribution, whether in money, property or otherwise, to its members or to relatives of its members; or
(d) the company is:
(i) a mutual life assurance company;
(ii) a friendly society dispensary;
(iii) a body constituted by a law of the Commonwealth or of a State or Territory and established for public purposes, not being a company within the meaning of the law in force in a State or Territory relating to companies;
(iv) a company in which a Government or a body referred to in subparagraph (iii) had a controlling interest on the last day of the year of income; or
(v) in relation to the year of income, a subsidiary of a public company.
(3) Subject to subsection (5), a company is not, by virtue of paragraph (2)(a) or (b), a public company for the purposes of subsection (1) in relation to the year of income where:
(a) at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, shares representing not less than three‑quarters of the value of the shares in the company, other than shares entitled to a fixed rate of dividend only;
(b) at any time during the year of income, not less than three‑quarters of the voting power in the company was capable of being exercised by one person or by persons not more than 20 in number;
(c) not less than three‑quarters of:
(i) the amount of any dividend paid by the company during the year of income; or
(ii) if more than one dividend was paid by the company during the year of income—the total amount of all the dividends paid by the company during the year of income;
was paid to one person or to persons not more than 20 in number; or
(d) a dividend was not paid by the company during the year of income but the Commissioner is of the opinion that, if a dividend had been paid by the company at any time during the year of income, not less than three‑quarters of the amount of that dividend would have been paid to one person or to persons not more than 20 in number.
(3A) Subject to subsection (3B), a company shall not be taken for the purposes of subsection (1) to be a public company in relation to a year of income by reason that a body constituted and established as mentioned in subparagraph (2)(d)(iii) (in this subsection referred to as the public body) had a controlling interest in the company on the last day of the year of income if:
(a) by reason of:
(i) any of the provisions contained in the constituent document of the company as in force on the last day of the year of income; or
(ii) any right, power, option or agreement in existence on the last day of the year of income that related to the management or conduct of the affairs of the company, including any right, power, option or agreement that related to the issue, allotment or redemption of shares, or the grant, withdrawal or variation of rights in respect of shares;
the exercise by the public body of any right or power in connexion with the company (being a right or power relating to the exercise by the public body of a controlling interest in the company), whether on the last day of the year of income or at any later time, could have been prevented;
(b) rights or powers of the public body in connexion with the company were exercised during the year of income otherwise than for the benefit of the public body or were not exercised in circumstances where it might reasonably have been expected that they would have been exercised;
(c) any shares in the company that were held by the public body on the last day of the year of income were acquired by the public body for no consideration or for a consideration that, in the ordinary course of commercial dealing, would be considered inadequate;
(d) in pursuance of any agreement entered into before the end of the year of income, the public body agreed to dispose of all or any of the shares in the company that were held by the public body on the last day of the year of income, being a disposal that was to take place at any time after the last day of the year of income;
(e) a dividend was paid by the company at a time during the year of income when the public body had a controlling interest in the company, and less than one‑half of the amount of that dividend was paid to the public body; or
(f) a dividend was not paid by the company at a time during the year of income when the public body had a controlling interest in the company but the Commissioner is of the opinion that, if a dividend had been paid by the company at such a time, less than one‑half of the amount of the dividend would have been paid to the public body.
(3B) Subsection (3A) does not apply in relation to a company in relation to a year of income if the Commissioner is satisfied that no shares in the company that were held by the public body referred to in that subsection on the last day of the year of income were allotted or transferred to the public body for the purpose, or for purposes that included the purpose, of enabling the company to be treated as a public company in relation to the year of income for the purposes of subsection (1), or in pursuance of an agreement entered into, or a course of conduct engaged in, for the purpose, or for purposes that included the purpose, of enabling the company to be so treated.
(3C) Paragraph (3A)(c) does not apply to an acquisition that is taken by section 70‑30 or 70‑110 of the Income Tax Assessment Act 1997 to have occurred.
(4) Subject to subsection (4D), a company is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if:
(a) at all times during the year of income all the shares in the first‑mentioned company were beneficially owned by a company which, or companies each of which, is a public company for the purposes of subsection (1) in relation to the year of income of that company (in this subsection referred to as the corresponding year of income) that corresponds with the first‑mentioned year of income but which is not, or none of which is:
(i) a company to which paragraph (2)(c) applies in relation to the corresponding year of income; or
(ii) a subsidiary of a public company for the purposes of this section in relation to the corresponding year of income by reason of subsection (4B);
(b) the corresponding year of income, or each of the corresponding years of income, referred to in paragraph (a) ended on the same day as the year of income first‑mentioned in that paragraph;
(c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the relevant holding company or holding companies in connexion with the first‑mentioned company so as to prevent the relevant holding company or holding companies from exercising for its or their own benefit the whole of the voting power in the first‑mentioned company or from receiving for its or their own benefit the whole of any dividends that might be paid by the first‑mentioned company or of any distribution that might be made of capital of the first‑mentioned company; and
(d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the relevant holding company or holding companies in connexion with the first‑mentioned company.
(4A) For the purposes of paragraphs 4(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of the relevant holding company or holding companies in connexion with the company first‑mentioned in subsection (4) (in this subsection referred to as the first‑mentioned company) if at that time that person had or has a right, power or option (whether by virtue of any provision in the constituent document of the first‑mentioned company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the relevant holding company or holding companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights.
(4B) Subject to subsection (4D), a company that is not, by virtue of subsection (4), a subsidiary of a public company for the purposes of this section in relation to the year of income is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if:
(a) at all times during the year of income the voting power in the first‑mentioned company was controlled, or was capable of being controlled, by a listed company or listed companies, either directly or through one or more companies, trustees or partnerships interposed between the first‑mentioned company and the listed company or listed companies;
(b) at all times during the year of income a listed company or listed companies had a right to receive, either directly or through one or more companies, trustees or partnerships interposed between the first‑mentioned company and the listed company or listed companies, more than one‑half of any dividends that might be paid by the first‑mentioned company and more than one‑half of any distribution that might be made of capital of the first‑mentioned company;
(c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the listed company or listed companies in connexion with the first‑mentioned company so as to prevent the listed company or listed companies from exercising for its or their own benefit control of the voting power in the first‑mentioned company or from receiving for its or their own benefit more than one‑half of any dividends that might be paid by the first‑mentioned company or of any distribution that might be made of capital of the first‑mentioned company; and
(d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the listed company or listed companies in connexion with the first‑mentioned company.
(4C) For the purposes of paragraphs (4B)(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of a listed company or listed companies in connexion with another company if at that time that person had, or has, a right, power or option (whether by virtue of any provision in the constituent document of the other company or of any company interposed between the listed company or listed companies and the other company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the listed company or listed companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights.
(4D) A company (in this subsection and subsection (4E) referred to as the company concerned) that would, apart from this subsection, be a subsidiary of a public company for the purposes of this section in relation to the year of income shall be deemed, for the purposes of this section, not to be a subsidiary of a public company in relation to the year of income if the Commissioner is satisfied that:
(a) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4)—the affairs of the company concerned were managed or conducted in the year of income in the interests of persons other than the relevant holding company or holding companies; or
(b) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4B)—the affairs of the company concerned were managed or conducted in the year of income without proper regard to the interests of the relevant holding company or holding companies.
(4E) In considering whether the affairs of the company concerned were managed or conducted in the year of income as mentioned in subsection (4D), the Commissioner shall have regard to: