Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 216 - Cum dividend sales and securities lending arrangements  

Subdivision 216-A - Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else  

SECTION 216-5   First situation (cum dividend sales)  

216-5(1)    
The first situation is one in which:

(a) the *corporate tax entity makes a *franked distribution, or a *distribution franked with an exempting credit, to a *member of the entity in respect of a *membership interest in the entity; and

(b) at the *distribution closing time, the member is under an obligation to transfer the membership interest to another person under a contract for the sale of the membership interest; and

(c) the contract:

(i) requires that the distribution be paid on to the other person; and

(ii) is entered into in the ordinary course of trading on an *approved stock exchange in Australia or elsewhere.

216-5(2)    
The *distribution is taken to have been made to the other person as a *member of the entity (and not to the member).

Note:

As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208 .

216-5(3)    
The *distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216-10 .