Part 3Disposal of asset (on or after 1 January 2002) by company or trust

Part 3 Disposal of asset (on or after 1 January 2002) by company or trust

11 Purpose of Part 3

This Part sets out decision-making principles with which the Commission must comply in making a determination for subsection 52ZZX(3) of the Act.

12 Disposal to individual by company or trust

1. This section applies if:

2. a company pays a dividend to an individual who is an attributable stakeholder of the company; and

3. the asset disposal provisions apply, and are taken to have applied, as if the individual had disposed of an asset of the individual.

4. This section also applies if:

5. a trust makes a distribution to an individual who is an attributable stakeholder of the trust; and

6. the asset disposal provisions apply, and are taken to have applied, as if the individual had disposed of an asset of the individual.

7. The Commission must consider whether the amount of the dividend or the value of the distribution is reasonable, having regard to the individual’s asset attribution percentage, in relation to the company or trust, before and after the disposal of the asset.

13 Disposal by way of dividend or distribution to genuine investor

1. This section applies if:

2. during a derivation period of a company, the company pays a dividend to an individual who is not an attributable stakeholder of the company; and

3. the individual has, before or during the derivation period, made a genuine transfer of capital to the company.

4. This section also applies if:

5. during a derivation period of a trust, the trust makes a distribution to an individual who is not an attributable stakeholder of the trust; and

6. the individual has, before or during the derivation period, made a genuine transfer of capital to the trust.

7. For subsections (1) and (2), a transfer of capital is a genuine transfer of capital if:

8. the individual receives, as consideration for the transfer, shares in the company, or units in the trust, of a value that is equivalent to the value of the capital transferred; and

9. the individual has a legal or equitable right to a share of the capital on the winding-up of the company or trust; and

10. the individual has a legal or equitable right to receive dividends or distributions in accordance with the constituent documents of the company or under the terms of the trust; and