16Request to eliminate undistributed amount

##### 16 Request to eliminate undistributed amount (1) Where: (a) in relation to a sale or sales of shares under a scheme: (i) a primary taxable amount exists, or primary taxable amounts exist, in relation to a person (in this section referred to as the relevant person) or each of 2 or more persons (in this section referred to as the relevant persons) in relation to an amount of undistributed profits tax payable in relation to a year of income by a company (in this section referred to as the relevant company); or (ii) primary taxable amounts exist in relation to a person (in this section also referred to as the relevant person) or each of 2 or more persons (in this section also referred to as the relevant persons) in relation to amounts of undistributed profits tax payable in relation to 2 or more years of income by a company (in this section also referred to as the relevant company); and (b) an assessment of undistributed profits tax has been made in relation to the relevant company in relation to each year of income, being the year of income in which the last sale time occurred or a preceding year of income, in relation to which there is an undistributed amount in relation to the company; a request that this section should apply, in relation to that sale or those sales of shares, in relation to the relevant company may be made by: (c) if, in the opinion of the Commissioner, it is reasonably practicable for the request to be made by a majority of the persons who constituted the board of directors of the relevant company immediately before the last sale time—a majority of those persons; or (d) in any other case—the relevant person, or the relevant persons together, as the case may be. (2) A request under subsection (1) shall: (a) be in writing signed by the person or each of the persons, as the case may be, making the request; and (b) be sent to or lodged with the Commissioner. (3) On receipt of a request under subsection (1), the Commissioner may grant the request or he may refuse the request. (4) In deciding whether to grant or refuse the request, the Commissioner shall have regard to: (a) the likelihood that any tax that may become payable by reason of the operation of this section in relation to the request will be paid; and (b) any other matters that he considers relevant. (5) Where a request is made under subsection (1), in relation to a sale of shares under a scheme, in relation to the relevant company and the request is granted by the Commissioner: (a) the relevant company shall, for the purposes of Division 7 of Part III of the Assessment Act, be deemed to have made a sufficient distribution in relation to each year of income to which paragraph (1)(a) applies; (b) for the purposes of the Assessment Act other than Division 11A of Part III and Division 4 of Part VI: (i) the relevant company shall be deemed to have paid to the relevant person or each of the relevant persons, as the case may be, as a shareholder or shareholders in the company, in relation to each primary taxable amount referred to in paragraph (1)(a) that exists in relation to the person concerned, a dividend of an amount ascertained by multiplying the undistributed amount in relation to the relevant company in relation to the year of income (in this paragraph referred to as the relevant year of income) to which the primary taxable amount relates by the apportionment factor in relation to the primary taxable amount; and (ii) the dividend: (A) shall be deemed to have been paid by the relevant company on the last day of the prescribed distribution period in relation to the relevant year of income out of profits derived by the relevant company from sources in Australia; and (B) shall be deemed not to be a dividend to which subsection 44(2) of the Assessment Act applies; and (c) if an amount (in this paragraph referred to as the deemed company tax payment) paid to the Commissioner after the time when the dividend is deemed to have been paid by the relevant company is deemed under subsection 9(7) to have been applied in reduction of undistributed profits tax that would, but for paragraph (a) of this subsection, be payable by the relevant company in relation to the relevant year of income: (i) in a case to which subparagraph (ii) does not apply—the Commissioner shall pay to the relevant person to whom the dividend is deemed to have been paid an amount ascertained by multiplying the deemed company tax payment by the apportionment factor in relation to the primary taxable amount; and (ii) if the dividend is deemed to have been paid to a person in the capacity of trustee of a trust estate—the Commissioner, having regard to the amounts included in the assessable incomes of the trust estate and of beneficiaries in the trust estate in respect of the deemed dividend, shall pay to the trustee of the trust estate, to a beneficiary or beneficiaries in the trust estate or to the trustee and a beneficiary or beneficiaries in the trust estate, an amount equal to, or, as the case requires, amounts in the aggregate equal to, the amount ascertained by multiplying the deemed company tax payment by the apportionment factor in relation to the primary taxable amount. (7) In forming an opinion for the purposes of section 7 as to whether vendors recoupment tax will become payable in relation to undistributed profits tax payable by a company in relation to a year of income, the Commissioner shall disregard the operation of paragraph (5)(a) of this section. (8) For the purposes of section 7 and subsection 9(7), undistributed profits tax (other than additional tax payable under section 207 of the Assessment Act) that would be payable by a company at a particular time but for paragraph (5)(a) of this section shall be deemed to be payable by the company at that time. (9) For the purposes of this section, where the whole of the undistributed profits tax payable by a company in relation to an undistributed amount in relation to a year of income has been paid, an undistributed amount shall not be taken to exist in relation to the company in relation to the year of income. (10) For the purposes of the application of this section in relation to an undistributed amount in a case where a part of the undistributed profits tax payable upon the undistributed amount has been paid, the reference to the undistributed amount shall be read as a reference to so much of the undistributed amount as bears to the undistributed amount the same proportion as the amount of the undistributed profits tax on the undistributed amount that remains unpaid bears to the undistributed profits tax on the undistributed amount. (11) A reference in subsection (10) to undistributed profits tax does not include a reference to additional tax payable under section 207 of the Assessment Act.