Tax Laws Amendment (2007 Measures No. 3) Act 2007 (79 of 2007)
Schedule 1 Distributions to entities connected with a private company and related issues
Part 1 Main amendments
Income Tax Assessment Act 1936
13 After Subdivision DA of Division 7A
Insert:
Subdivision DB - Other exceptions
109RB Commissioner may disregard operation of Division or allow dividend to be franked
(1) 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.
(2) 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)).
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
109RC Dividend may be franked if taken to be paid because of family law obligation
(1) This section applies if a dividend is taken to be paid under this Division because of a family law obligation.
(2) Subparagraph 202-45(g)(i) of the Income Tax Assessment Act 1997 does not make the amount of the dividend unfrankable.
(3) The dividend can be franked in accordance with Part 3-6 of the Income Tax Assessment Act 1997 only if:
(a) the dividend is franked at the private company’s benchmark franking percentage for the franking period in which the dividend is taken to be paid; or
(b) if the private company does not have a benchmark franking percentage for the period - the dividend is franked at a franking percentage of 100%.
(4) For the purposes of subsection (3), if the recipient of the dividend is not a member of the private company for the purposes of Part 3-6 of the Income Tax Assessment Act 1997, treat that recipient as such a member.
109RD Commissioner may extend period for repayments of amalgamated loan
(1) The Commissioner may make a decision under subsection (2) if:
(a) section 109E operates with the result that a private company is taken to pay a particular dividend to a particular entity (the recipient ); and
(b) the shortfall mentioned in paragraph 109E(1)(c) arises because the recipient is unable to pay the private company the minimum yearly repayment mentioned in that paragraph because of circumstances beyond the recipient’s control.
(2) The Commissioner may decide in writing that the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)) if the recipient pays the private company the amount of the shortfall within a specified time.
(3) In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following:
(a) the nature of the circumstances mentioned in paragraph (1)(b);
(b) any other matters that the Commissioner considers relevant.
(4) This Division is taken not to operate with the result mentioned in paragraph (1)(a) if:
(a) the Commissioner makes a decision under subsection (2); and
(b) the recipient pays the private company the amount of the shortfall within the specified time.
(5) Despite subsection 33(3A) of the Acts Interpretation Act 1901, each decision made under subsection (2) must relate only to one amount that would be taken to be a dividend paid by the private company (disregarding this section).