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 208-135   Relationships that will give rise to a franking credit under item 5 of the table in section 208-130  

208-135(1)    
A relationship between an entity making a *franked distribution and the recipient of the distribution is of a type that gives rise to a *franking credit under item 5 or 6 of the table in section 208-130 if either:

(a) both entities are members of the same effectively wholly-owned group; or

(b) the recipient holds more than 5% of the *membership interests in the entity making the distribution (other than finance membership interests or distribution access membership interests within the meaning of section 208-30 or membership interests that do not carry the right to receive distributions) and it would be reasonable to conclude that the risks involved in, and the opportunities resulting from, holding those membership interests are substantially borne by, or substantially accrue to, the recipient.

208-135(2)    
In deciding whether it would be reasonable to make the conclusion mentioned in paragraph (1)(b):

(a) have regard to any *arrangement in respect of the *membership interests (including unissued membership interests) in the entity making the distribution (including derivatives held or issued in connection with those membership interests); and

(b) do not have regard to risks involved in the ownership of membership interests in the entity making the distribution that are substantially borne by any person in the person's capacity as a secured creditor.