Income Tax Assessment Act 1936

Div 6B repealed by No 53 of 2016, s 3 and Sch 5 item 3, applicable to assessments for income years starting on or after 1 July 2016. No 53 of 2016 (as amended by No 15 of 2019), s 3 and Sch 5 Pt 4 contains the following transitional provision:

Part 4 - Transitional

75 Transitional rule for 20% tracing requirement and repeal of Division 6B - imputation  
(1)
This item applies if at a time (the cessation time ), on or after the commencement of this Schedule, either:

(a) section 102K of the Income Tax Assessment Act 1936 ceases to apply to the trustee of a trust because of the repeal of that section by Part 2 of this Schedule; or

(b) section 102S of that Act ceases to apply to the trustee of a trust because of the amendment made by Part 1 of this Schedule.

(2)
Subitems (3) and (3A) apply if:

(a) an event happens in respect of the trust that is described in:

(i) the table in subsection 205-15(1) of the Income Tax Assessment Act 1997 ; or

(ii) the table in subsection 205-30(1) of that Act; and

(b) the event happens on or after the cessation time but before 1 July 2019; and

(c) the event is:

(i) the trust paying income tax for an income year starting before 1 July 2016; or

(ii) the trust paying a PAYG instalment in respect of income tax for an income year starting before 1 July 2016; or

(iii) the trust receiving a refund of income tax for an income year starting before 1 July 2016; or

(iv) the trust franking a distribution; or

(v) the trust ceasing to be a franking entity.

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S 75(2) amended by No 15 of 2019, s 3 and Sch 1 items 34 - 36, by substituting " Subitems (3) and (3A) apply " for " Subitem (3) applies " , " 1 July 2019 " for " 1 July 2018 " in para (b) and inserting para (c)(v), effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(2A)
However, subparagraph (2)(c)(v) does not apply unless the trust ' s franking account is in surplus immediately before the trust ceases to be a franking entity.

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S 75(2A) inserted by No 15 of 2019, s 3 and Sch 1 item 37, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(3)
For the purposes of determining whether a franking credit or franking debit arises in the trust ' s franking account as a result of the event:

(a) treat the trust as a corporate tax entity at the time the event happens; and

(b) treat the trust as satisfying the residency requirement in section 205-25 of the Income Tax Assessment Act 1997 for the income year in which the event happens.

(3A)
If the event is an event described in item 4 of the table in subsection 205-30(1) of the Income Tax Assessment Act 1997 , treat the event as happening on 1 July 2019.

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S 75(3A) inserted by No 15 of 2019, s 3 and Sch 1 item 38, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(4)
Subitems (5) and (6) apply if:

(a) the trust makes a distribution on or after the cessation time but before 1 July 2019; and

(b) the trust ' s franking account is in surplus just before the trust makes the distribution; and

(c) the distribution is not made out of income derived in relation to the 2016-17 income year or a later income year.

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S 75(4) amended by No 15 of 2019, s 3 and Sch 1 items 39 - 41, by substituting " Subitems (5) and (6) apply " for " Subitem (5) applies " , " 1 July 2019 " for " 1 July 2018 " in para (a) and inserting para (c), effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(5)
For the purposes of determining whether the trust franks the distribution as a result of the event:

(a) treat the trust as a corporate tax entity at the time it makes the distribution; and

(b) treat the trust as satisfying the residency requirement in section 202-20 of the Income Tax Assessment Act 1997 at the time it makes the distribution.

(6)
Treat a beneficiary of the trust who receives the distribution as receiving, for the purposes of the income tax law, a dividend from a corporate tax entity.

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S 75(6) inserted by No 15 of 2019, s 3 and Sch 1 item 42, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

Note:

As a result, the trust will satisfy the requirement in paragraph 202-5(a) of that Act in respect of the distribution. If the other requirements in section 202-5 of that Act are satisfied in respect of the distribution, this means that the trust franks the distribution.

Div 6B comprising s 102D to 102L inserted by No 154 of 1981.

S 102E repealed by No 53 of 2016, s 3 and Sch 5 item 3, applicable to assessments for income years starting on or after 1 July 2016. For transitional provision, see note under Pt III Div 6B heading. S 102E formerly read:

SECTION 102E PRESCRIBED ARRANGEMENTS  
102E(1)
A reference in this Division, in relation to a unit trust, to an arrangement that is a prescribed arrangement in relation to a company is a reference to an arrangement under which -

(a) a shareholder in the company was, by reason of being a shareholder in the company, to be granted a right or an option to acquire, either directly or indirectly through any interposed companies or trusts, a unit or units in the unit trust; and

(b) the units in the unit trust were to be held or dealt with, or the income or property of the unit trust was to be applied, during any year of income, in such a way that, in the opinion of the Commissioner, if section 102G were applied in relation to the unit trust in relation to the year of income, the unit trust would be a public unit trust in relation to the year of income.

102E(2)
Without limiting the generality of subsection (1), a reference in that subsection to an arrangement under which a shareholder in a company was, by reason of being a shareholder in the company, to be granted a right or an option to acquire a unit or units in a unit trust includes a reference to an arrangement under which a shareholder in the company was, by reason of being a shareholder in the company, to be given a preference or advantage in relation to -

(a) the allocation of a unit or units in the unit trust or the acceptance of moneys by any person in relation to the allocation of a unit or units in the unit trust; or

(b) the acquisition of a unit or units in the unit trust.

102E(3)
A reference in this Division, in relation to a unit trust (in this subsection and subsection (4) referred to as the second unit trust ), to an arrangement that is a prescribed arrangement in relation to another unit trust (in this subsection and subsection (4) referred to as the first unit trust ) is a reference to an arrangement under which -

(a) a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be granted a right or an option to acquire, either directly or indirectly through any interposed companies or trusts, a unit or units in the second unit trust; and

(b) the units in the second unit trust were to be held or dealt with, or the property of the second unit trust was to be applied, during any year of income, in such a way that, in the opinion of the Commissioner, if section 102G were applied in relation to the second unit trust in relation to the year of income, the second unit trust would be a public unit trust in relation to the year of income.

102E(4)
Without limiting the generality of subsection (3), a reference in that subsection to an arrangement under which a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be granted a right or an option to acquire a unit or units in the second unit trust includes a reference to an arrangement under which a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be given a preference or advantage in relation to -

(a) the allocation of a unit or units in the second unit trust or the acceptance of moneys by any person in relation to the allocation of a unit or units in the second unit trust; or

(b) the acquisition of a unit or units in the second unit trust.