Income Tax Act 2007 section 689

Receipt of consideration in connection with relevant company distribution (circumstance D)

Section 689 sets out the conditions under which a person is treated as receiving consideration in connection with a relevant company distribution, which is the fourth circumstance (circumstance D) that can trigger the transactions in securities anti-avoidance rules.

• Three conditions must all be met for this provision to apply to a person.
• The person must have received consideration in connection with a distribution or other transaction involving a relevant company.
• The concept of "consideration" is broadly defined and extends beyond contractual payments to include any receipt of money or money's worth, even where there is no contractual obligation to make the payment.
• This provision works alongside the other circumstance tests to identify situations where income may have been converted into a capital receipt to gain a tax advantage.