Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 215 - Consequences of the debt/equity rules  

Subdivision 215-B - Non-share dividends that are unfrankable to some extent  

SECTION 215-10   Certain non-share dividends by ADIs unfrankable  

215-10(1)    
A *non-share dividend paid by an ADI (an authorised deposit-taking institution) for the purposes of the Banking Act 1959 is unfrankable if:

(a) the ADI is an Australian resident; and

(b) the non-share dividend is paid in respect of a *non-share equity interest that:

(i) by itself; or

(ii) in combination with one or more *schemes that are *related schemes to the scheme under which the interest arises;

forms part of the ADI ' s Tier 1 capital either on a solo or consolidated basis (within the meaning of the *prudential standards); and

(c) the non-share equity interest is issued at or through a *permanent establishment of the ADI in a *listed country; and

(d) the funds from the issue of the non-share equity interest are raised and applied solely for one or more purposes permitted under subsection (2) in relation to the non-share equity interest.

215-10(2)    
The permitted purposes in relation to the *non-share equity interest (the relevant interest ) are the following:

(a) the purpose of the business of the ADI carried on at or through the permanent establishment other than the transfer of funds directly or indirectly to:

(i) the Australian head office of the permanent establishment; or

(ii) any *connected entity of the ADI that is an Australian resident; or

(iii) a permanent establishment of the ADI, or of a connected entity of the ADI, located in Australia;

(b) the purpose of redeeming:

(i) a *debt interest; or

(ii) a non-share equity interest;

that is issued, before the relevant interest is issued, at or through the permanent establishment and is held by a connected entity of the ADI that is an Australian resident;

(c) the purpose of returning funds to:

(i) the Australian head office of the permanent establishment; or

(ii) a permanent establishment of the ADI or of a connected entity of the ADI, located in Australia;

if the funds are contributed, before the relevant interest is issued, for use in the business of the ADI carried on at or through the permanent establishment.