Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 207 - Effect of receiving a franked distribution  

Subdivision 207-E - Exceptions to the rules in Subdivision 207-D  

Operative provisions

SECTION 207-110   Effect of non-assessable income on gross up and tax offset  

207-110(1)    
This section applies to an entity to whom a *franked distribution is made, or *flows indirectly, in any of the following circumstances:

(a) the entity is an *exempt institution that is eligible for a refund and the distribution does not flow indirectly to the entity as a partner in a partnership under subsection 207-50(2) ;

(b) the distribution is, or the entity ' s *share of the distribution would have been, this kind of income in its hands:

(i) *exempt income under section 295-385 (about income from assets set aside to meet current pension liabilities), section 295-390 (about income from other assets used to meet current pension liabilities) or section 295-400 (about income of a PST attributable to current pension liabilities); or

(ii) *non-assessable non-exempt income under paragraph 320-37(1)(a) (segregated exempt assets of a life insurance company) or paragraph 320-37(1)(d) (certain amounts received by a friendly society) of this Act.

207-110(2)    
The following have effect in relation to the entity:

(a) section 207-90 or 207-95 (as appropriate) does not apply to the entity;

(b) if the entity would, apart from section 207-90 or 207-95 , be entitled to a *tax offset under section 207-20 or 207-45 in relation to the distribution - the entity is entitled to that tax offset;

(c) if the entity would not be entitled to such a tax offset, the entity is entitled to a tax offset under this section that is equal to:

(i) if the distribution is made to the entity - the *franking credit on the distribution; or

(ii) if the distribution *flows indirectly to the entity - the entity ' s *share of the franking credit on the distribution;

(d) if the distribution flows indirectly through the entity to another entity - subsection 207-35(3) and section 207-45 do not apply to that other entity.

Note:

Paragraph (2)(c) only applies to an exempt institution that is eligible for a refund and that is not entitled to a tax offset under section 207-20 or 207-45 . An entity covered by paragraph (1)(b) will, in all cases, be entitled to a tax offset under section 207-20 or 207-45 .