Income tax 2018

Effect of share premium account on continuity of ownership test analysis

Source: The Tax Specialist Journal Article

Published Date: 1 Aug 2018


Par value shares and share premium accounts still exist in some jurisdictions, such as the United Kingdom. If a company incorporated in such a jurisdiction is relevant to an Australian tax issue, its par value shares and share premium account might intrude on Australian tax concerns. Division 165 of the Income Tax Assessment Act 1997 contains rules restricting the ability of a company to claim a deduction for past period losses (the so-called loss carry forward rules), which in some circumstances will require an analysis of ownership and control of various rights attaching to shares in non-Australian companies " some of which may still have par value shares and share premium accounts. Division 165 and s 80A of the Income Tax Assessment Act 1936 both apply various tests to determine whether a company passes the so-called continuity of ownership test in respect of a tax loss. This article discusses how rights to share premium should be treated for the purpose of the loss carry forward rules.

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Income tax 2018

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