Income Tax Assessment Act 1997

Gross-up and tax offset allowed because entity is an exempt institution that is entitled to a refund  
207-125(1)
Where an entity makes a *franked distribution to an *exempt institution that is eligible for a refund, the institution is entitled to a *tax offset equal to the *franking credit on the distribution.

207-125(2)
Where:

(a) a *franked distribution *flows indirectly to an *exempt institution that is eligible for a refund; and

(b) the distribution does not flow indirectly to the institution as a partner in a partnership; and

(c) the distribution does not flow indirectly to the institution through another exempt institution that is eligible for a refund;

the institution is entitled to a *tax offset equal to the amount of the tax offset to which the institution would have been entitled, using Subdivision 207-B, if the exempt status of the institution were ignored.