Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 7A - Distributions to entities connected with a private company  

Subdivision DB - Other exceptions  

SECTION 109RB   COMMISSIONER MAY DISREGARD OPERATION OF DIVISION OR ALLOW DIVIDEND TO BE FRANKED  

109RB(1)   [ Honest mistake, etc]  

The Commissioner may make a decision under subsection (2) if:

(a) this Division (disregarding this section) operates with the result that:

(i) a private company is taken to pay a particular dividend to a particular entity (the recipient ) under this Division; or

(ii) a particular amount is included, as if it were a dividend, in the assessable income of a particular entity (also the recipient ) in relation to a private company under Subdivision EA ; and

(b) the result mentioned in paragraph (a) arises because of an honest mistake or inadvertent omission by any of the following entities:

(i) the recipient;

(ii) the private company;

(iii) any other entity whose conduct contributed to that result.

109RB(2)   [ Commisioner's discretion]  

The Commissioner may decide in writing that:

(a) the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)); or

(b) the dividend mentioned in subparagraph (1)(a)(i) may be franked in accordance with Part 3-6 of the Income Tax Assessment Act 1997 (see subsection (6)).

109RB(3)   [ Relevant contributing factors]  

In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following:

(a) the circumstances that led to the mistake or omission mentioned in paragraph (1)(b);

(b) the extent to which any of the entities mentioned in paragraph (1)(b) have taken action to try to correct the mistake or omission and if so, how quickly that action was taken;

(c) whether this Division has operated previously in relation to any of the entities mentioned in paragraph (1)(b), and if so, the circumstances in which this occurred;

(d) any other matters that the Commissioner considers relevant.

109RB(4)   [ Further conditions]  

The Commissioner may make a decision under subsection (2) subject to any of the following kinds of condition:

(a) a condition that the recipient or another entity must make specified payments to the private company or another entity within a specified time;

(b) a condition that a specified requirement in this Division must be met within a specified time.

109RB(5)   [ Effect of decision]  

This Division is taken not to operate with the result mentioned in paragraph (1)(a) if:

(a) the Commissioner makes a decision under paragraph (2)(a); and

(b) if the Commissioner makes the decision subject to a condition under subsection (4) - the condition is satisfied.

109RB(6)   [ Dividend not made unfrankable]  

If the Commissioner makes a decision under paragraph (2)(b), subparagraph 202-45(g)(i) of the Income Tax Assessment Act 1997 does not make the dividend mentioned in subparagraph (1)(a)(i) unfrankable.

109RB(7)   [ Restriction]  

Despite subsection 33(3A) of the Acts Interpretation Act 1901 , each decision made under subsection (2) must relate only to one amount that would (disregarding this section):

(a) be taken to be a dividend paid by the private company; or

(b) be included, as if it were a dividend, in the assessable income of an entity.