Taxation Laws Amendment Act 1993 (17 of 1993)

Part 3   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 4   Amendments relating to dividend streaming

15   Interpretation

Section 160APA of the Principal Act is amended:

(a) by inserting "the first company entered into or carried out the arrangement or any part of the arrangement and either" after "means an arrangement where" in the definition of "dividend streaming arrangement";
            

(b) by omitting paragraph (a) of the definition of "dividend streaming arrangement" and substituting the following paragraph:
            

"(a) both of the following conditions are satisfied:

(i) a shareholder in another company (the 'target shareholder') is empowered (either unconditionally or on the fulfilment of a condition) to exercise any choice or selection;

(ii) the exercise of the choice or selection, or the failure to exercise the choice or selection, has the effect of determining, to any extent, whether the first company will pay one or more franked dividends to a shareholder in the first company, being an upstream entity in relation to the target shareholder, in substitution, in whole or in part, for the payment, or proposed payment, by that other company of one or more unfranked dividends to the target shareholder; or";

(c) by omitting "in this definition called" from subparagraph (b)(i) of the definition of "dividend streaming arrangement";
            

(d) by inserting after sub-subparagraph (b)(ii)(A) of the definition of "dividend streaming arrangement" the following sub-subparagraph:
            

"(AA) whether the first company will pay an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this sub-subparagraph called the 'scheme dividend') to another shareholder in the first company, being an upstream entity in relation to the first shareholder, in substitution, in whole or in part, for the payment, or proposed payment, to the first shareholder of one or more franked dividends, being dividends whose actual or proposed franking percentage exceeds the franking percentage of the scheme dividend;";

(e) by inserting after sub-subparagraph (b)(ii)(B) of the definition of "dividend streaming arrangement" the following sub-subparagraph:
            

"(BA) whether the first company will issue one or more tax-exempt bonus shares to another shareholder in the first company, being an upstream entity in relation to the first shareholder, in substitution, in whole or in part, for the payment, or proposed payment, to the first shareholder of one or more franked dividends;";

(f) by inserting the following definition:
            

" 'upstream entity', in relation to a shareholder in a company, means:

(a) a trustee of a trust estate ('top trust') where:

(i) the shareholder benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the top trust; or

(ii) one or more partnerships or trusts are interposed between the top trust and the shareholder; or

(b) a partnership ('top partnership') where:

(i) the shareholder is a partner in the top partnership; or

(ii) one or more partnerships or trusts are interposed between the top partnership and the shareholder;".