Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 208 - Exempting entities and former exempting entities  

Subdivision 208-F - Exempting accounts and franking accounts of exempting entities and former exempting entities  

Operative provisions

SECTION 208-130  

208-130   Franking credits arising because of status as exempting entity or former exempting entity  

The following table sets out when a credit arises in the *franking account of an entity because of its status as an *exempting entity or *former exempting entity.

Franking credits arising because of status as an exempting entity or former exempting entity
Item	If:	A credit of:	Arises:
1	an entity becomes a *former exempting entity; and the entity has a *franking deficit at the time it becomes a former exempting entity	an amount equal to the franking deficit	immediately after the entity becomes a former exempting entity
2	an entity receives a *distribution *franked with an exempting credit; and	an amount worked out under subsection 208-165(1)	on the day on which the distribution is made
	the entity is an *exempting entity at the time the distribution is made; and
	the entity satisfies the *residency requirement for the income year in which the distribution is made and at the time the distribution is made; and
	some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the entity; and
	the entity is an *eligible continuing substantial member in relation to the distribution; and
	the distribution is not affected by a manipulation of the imputation system mentioned in section 208-160
3	the entity receives a *distribution *franked with an exempting credit; and	an amount worked out under subsection 208-170(1)	on the day on which the distribution is made
	the entity is an *exempting entity at the time the distribution is made; and
	the entity satisfies the *residency requirement for the income year in which the distribution is made and at the time the distribution is made; and
	some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the entity; and
	the entity is an *eligible continuing substantial member in relation to the distribution; and
	the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution
4	a *distribution *franked with an exempting credit *flows indirectly to the entity (the ultimate recipient ); and the recipient of the distribution is an *eligible continuing substantial member in relation to the distribution; and except for the fact that the ultimate recipient is not an eligible continuing substantial member in relation to the distribution, it would have been entitled to a *franking credit because of the distribution had the distribution been made to the ultimate recipient	an amount equal to the franking credit that would have arisen for the ultimate recipient if: (a) the ultimate recipient had been an eligible continuing substantial member in relation to the distribution; and (b) the distribution had been made to the ultimate recipient; and (c) the distribution had been franked with a franking credit equal to the ultimate recipient ' s *share of the actual franking credit	on the day on which the distribution is made
5	an *exempting entity makes a *franked distribution to the entity (the recipient ); and at the time the distribution is made:	an amount worked out using the formula in subsection 208-165(2)	on the day on which the distribution is made
	(a) the recipient is an exempting entity; and
	(b) the recipient satisfies the *residency requirement; and
	(c) the relationship between the entities is of the type mentioned in section 208-135; and
	the recipient satisfies the residency requirement for the income year in which the distribution is made; and
	some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the recipient; and
	the distribution is not affected by a manipulation of the imputation system mentioned in section 208-160
6	an *exempting entity makes a *franked distribution to the entity (the recipient ); and at the time the distribution is made:	an amount worked out using the formula in subsection 208-170(2)	on the day on which the distribution is made
	(a) the recipient is an exempting entity; and
	(b) the recipient satisfies the *residency requirement; and
	(c) the relationship between the entities is of the type mentioned in section 208-135; and
	the recipient satisfies the residency requirement for the income year in which the distribution is made; and
	some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the recipient; and
	the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution
7	a *distribution made by an *exempting entity *flows indirectly to the entity (the ultimate recipient ); and the recipient of the distribution is an *eligible continuing substantial member in relation to the distribution; and except for the fact that the ultimate recipient is not an eligible continuing substantial member in relation to the distribution, it would have been entitled to a *franking credit because of the distribution had the distribution been made to the ultimate recipient	an amount equal to the franking credit that would have arisen for the ultimate recipient if: (a) the ultimate recipient had been an eligible continuing substantial member in relation to the distribution; and (b) the distribution had been made to the ultimate recipient; and (c) the distribution had been franked with a franking credit equal to the ultimate recipient ' s *share of the actual franking credit	on the day on which the distribution is made
8	the Minister makes a determination under paragraph 208-185(4)(b) giving rise to a *franking credit for the entity	the amount of the credit specified in the determination	on the day specified in the determination
9	an *exempting debit arises for the entity under item 3, 5 or 8 of the table in section 208-120	an amount equal to the exempting debit	when the exempting debit arises
10	a *former exempting entity becomes an *exempting entity; and the entity has an *exempting surplus at the time it becomes an *exempting entity	an amount equal to the *exempting surplus	immediately after it becomes an exempting entity

Note:

Item 9 is designed to reverse out franking debits that arise in relation to a period during which the entity is an exempting entity. The entity will receive an exempting debit instead.