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Designated Private Company

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What is a designated private company?

A company is a designated private company if:

  • the company satisfies at least two of the following three sub-conditions in relation to the financial year ending immediately before the assessment period:
  • the consolidated gross operating revenue for the financial year for the company and its subsidiaries is less than $25 million,
  • the value of the consolidated gross assets at the end of the financial year of the company and its subsidiaries is less then $12.5 million,
  • the company and its subsidiaries have fewer than 50 employees at the end of the financial year; or

Once it has been determined that the company is a designated private company, then the issue of who controls the assets and income of the company and the percentage of control to be attributed to the individual(s) can be decided.    

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Non-designated private companies

Non-designated private companies are assessed under the pre 1 January 2002 private company rules.    

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Company has the same meaning as in the Income Tax Assessment Act 1997.

 

 

According to Section 52ZZA of the VEA, a company is a designated private company at a particular time if the company:

  • satisfies at least 2 of the following conditions in relation to the financial year that ended immediately before that time:
  • gross operating revenue is less than $25 million;

  • gross assets at the end of the financial year are less than $12.5 million;

  • the company has fewer than 50 employees at the end of the financial year, or

  • the company came into existence after the end of the financial year that ended immediately preceding that time, or
  • the company is a declared private company (DPC) ,

and the company is not an excluded company.

 

 

Financial year, in relation to a company, means:

  • a period of 12 months beginning on 1 July, or
  • if some other period is the company's tax year that other period.

 

 

Commission may determine in writing that a company having been included in a specified class of companies is a declared private company for the purposes of section 52ZZA of the VEA and is therefore a DPC .

 

 

An excluded company is a company declared in writing by Commission to be excluded from the private trust and company provisions.

Control includes control as a result of, or by means of, trusts, agreements, arrangements, understandings and practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights.