INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
Hide history noteSubject to the rules on the application of this Part set out in the Income Tax (Transitional Provisions) Act 1997 , this Part does not apply to events that occur on or after 1 July 2002.
(a) applies to a non-share equity interest in the same way as it applies to a share; and
(b) applies to an equity holder who is not a shareholder in the same way as it applies to a shareholder; and
(c) applies to a non-share dividend in the same way as it applies to a dividend. 160AOA(2) [Sec 160APA not covered]
Subsection (1) does not apply to paragraph (aaa) of the definition of frankable dividend in section 160APA .
Subsection (1) has effect subject to the special provision made for non-share equity interests, equity holders who are not shareholders and non-share dividends in:
(a) paragraphs (ga) and (gb) of the definition of frankable dividend in section 160APA ; and
(b) section 160APAAAA ; and
(c) section 160APAAAB ; and
(d) subsection 160AQCBA(3A) , (3B) and (3C).
In this Part, unless the contrary intention appears:
accountable interest
, in relation to shares in a company, has the meaning given by section
160APHBD
.
accountable share
, in relation to a company, has the meaning given by section
160APHBC
.
"adjusted amount"
, in relation to another amount (in this definition called the ``basic amount''), means the amount calculated in accordance with the formula:
where:
BA is the basic amount; and
CR is the applicable general company tax rate;
AD/RLA component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
"amended assessment"
does not include an assessment that would not be an amended assessment except for section
171
;
"amended company tax assessment"
means an amended assessment of company tax;
"applicable general company tax rate"
means:
(a) in relation to:
(i) (Omitted by No 216 of 1991)
(iaa) the paying of an instalment by a company in respect of a year of income under section 221AZK ;
(iab) the making of any other payment by a company in respect of a year of income under Division 1C of Part VI ;
(iaba) a payment of a PAYG instalment in respect of a year of income;
(iabb) the application of a PAYG instalment variation credit to reduce a person's liability for a PAYG instalment in respect of a year of income;
(iabc) a payment of company tax in respect of a year of income;
(iabd) a claim for a PAYG instalment variation credit in respect of a year of income;
(iac) the payment of a refund to a company in respect of a year of income under Division 1C of Part VI ;
(iad) the payment of a refund to a company of an amount paid by the company in respect of a year of income where the refund is covered by section 160APY or 160APYA ;
(iae) the crediting by the Commissioner of an amount paid by a company in respect of a year of income where the crediting is covered by section 160APYA ;
(ia) the making of an initial payment of tax by a company in respect of a year of income under section 221AP ;
(ib) the making of any further payment by a company on account of company tax in respect of a year of income under Division 1B of Part VI;
(iba) the payment of a final payment of tax in respect of a year of income under section 221AZD ;
(ibb) the making of a payment by a company of, or on account of, company tax in respect of a year of income where the payment is covered by section 160APMD;
(ic) the payment of a refund to a company in respect of a year of income under Division 1B of Part VI ;
(id) the payment of a refund to a company of an amount paid by the company in respect of a year of income where the refund is covered by section 160APYBA;
(ie) the application by the Commissioner of an amount paid by a company in respect of a year of income where the application is covered by section 160APYBA;
(iea) the payment of a refund of a PAYG instalment or company tax in respect of a year of income;
(ii) an amended assessment of the company tax payable by a company for a year of income;
(iii) a foreign tax credit allowable in respect of tax paid or payable by a company in respect of income derived in a year of income;
the general company tax rate for the year of tax to which the year of income relates;
(iv) the calculation of a venture capital debit under section 160ASEH in relation to a year of income;
(aa) in relation to an amount calculated for a year of income using a formula in any of the following provisions:
(i) sections 160APVBA to 160APVD (inclusive);
the general company tax rate for the year of tax to which the year of income relates;
(ii) sections 160AQCD to 160AQCL (inclusive);
(ab) in relation to the class C franking credit that arises under section 160APVP on the payment of venture capital deficit tax by a PDF in respect of a franking year - the general company tax rate used to work out the amount of the venture capital deficit tax;
(b) in relation to the liability of a company to pay class A franking deficit tax or a class A deficit deferral tax - 39%;
(ba) in relation to the liability of a company to pay class B franking deficit tax or a class B deficit deferral tax - 33%;
(baa) in relation to the liability of a company to pay class C franking deficit tax or a class C deficit deferral tax - 30%;
(bb) in relation to the calculation of the adjusted amount in relation to an amount mentioned in paragraph 160APYC(a), (b) or (c) - the applicable general company tax rate in relation to the initial payment of tax concerned;
(bc) in relation to the calculation of the adjusted amount in relation to the amount of a payment mentioned in section l60APQA, being a payment that relates to an offset of company tax, or increased company tax, for a year of income - the general company tax rate for the year of tax to which the year of income relates;
(bd) in relation to the amount of a class C franking credit or franking debit calculated in respect of a payment of a company tax instalment or company tax, or the application of a PAYG variation credit, in respect of a year of income under any of the following provisions:
(i) section 160APVJ ;
(ii) section 160APVK ;
(iii) section 160APVL ;
(iv) section 160APVM ;
(v) section 160AQCNCF ;
(vi) section 160AQCNCG ;
(vii) section 160AQCNCH ;
the general company tax rate for the year of tax to which the year of income relates;
(viii) section 160AQCNCI ;
(be) in relation to the amount of a class A franking credit or franking debit calculated in respect of a payment of a company tax instalment or company tax, or the application of a PAYG variation credit, in respect of a year of income under any of the following provisions:
(i) section 160AQCNCF ;
(ii) section 160AQCNCG ;
(iii) section 160AQCNCH ;
39%;
(iv) section 160AQCNCI ;
(bf) in relation to an amount calculated in respect of an assessment of company tax in respect of a year of income for the purposes of section 160AQCNCC - the general company tax rate for the year of tax to which the year of income relates;
(bg) in relation to the amount of a class C franking credit or franking debit calculated in respect of an amended assessment of company tax in respect of a year of income for the purposes of section 160AQCNCD , 160AQCNCH or 160AQCNCI - the general company tax rate for the year of tax to which the year of income relates;
(bh) in relation to the amount of a class A franking credit or franking debit calculated in respect of an amended assessment of company tax in respect of a year of income for the purposes of section 160AQCNCD , 160AQCNCH or 160AQCNCI - 39%;
(c) in relation to:
(i) the payment of a class A franked dividend to a shareholder in a company; or
39%; or
(ii) a trust amount or partnership amount that relates, directly or indirectly, to the payment of a class A franked dividend to a shareholder in a company;
(ca) in relation to:
(i) the payment of a class B franked dividend to a shareholder in a company; or
33%; or
(ii) a trust amount or partnership amount that relates, directly or indirectly, to the payment of a class B franked dividend to a shareholder in a company;
(cb) in relation to:
(i) the payment of a class C franked dividend to a shareholder in a company; or
30%.
(ii) a trust amount or partnership amount that relates, directly or indirectly, to the payment of a class C franked dividend to a shareholder in a company;
"approved form"
means a form approved, in writing, by the Commissioner for the purposes of the provision in which the expression occurs;
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise;
arrangement
†
has the same meaning as in the
Income Tax Assessment Act 1997
.
[ † CCH Note: This second definition of ``arrangement'' was inserted by No 93 of 1999.]
associate
has the same meaning as in section
318
.
"borrower"
, in relation to a securities lending arrangement, has the meaning given by subsection
26BC(3)
;
"borrowing period"
, in relation to a securities lending arrangement, has the meaning given by subsection
26BC(3)
;
"buy-back"
has the same meaning as in Division
16K
of Part
III
;
"class A deficit deferral tax"
means tax payable in accordance with section
160AQJA
;
class A exempted amount
, in relation to a dividend, means so much of the dividend as has been franked in accordance with subsection
160AQFA(1)
.
class A exempted dividend
means a dividend to the extent (if any) to which it has been franked in accordance with subsection
160AQFA(1)
.
class A exempting account balance
, in relation to a former exempting company, means:
(a) if the company has a class A exempting surplus - the amount of the surplus; or
(b) if the company has a class A exempting deficit - the amount of the deficit; or
(c) otherwise - nil.
class A exempting deficit
means a deficit calculated under subsection
160AQCND(3)
.
class A exempting surplus
means a surplus calculated under subsection
160AQCND(1)
.
"class A flow-on franking amount"
means an amount that would be a flow-on franking amount if:
(a) a reference in the definition of ``flow-on franking amount'' to a franked dividend were, by express provision, confined to a class A franked dividend; and
(b) a reference in that definition to the flow-on franking amount were, by express provision, confined to a class A flow-on franking amount;
"class A franked amount"
, in relation to a dividend, means so much of the dividend as has been franked in accordance with subsection
160AQF(1)
;
class A franked dividend
means a dividend to the extent (if any) to which it has been franked in accordance with subsection
160AQF(1)
.
"class A franking account assessment"
means the ascertainment of the class A franking account balance and of any class A franking deficit tax payable;
"class A franking account balance"
, in relation to a company, means:
(a) if the company has a class A franking surplus - the amount of that surplus; or
(b) if the company has a class A franking deficit - the amount of that deficit; or
(c) in any other case - nil;
"class A franking deficit"
means a deficit calculated under subsection
160APJ(2)
;
"class A franking deficit tax"
means tax payable in accordance with subsection
160AQJ(1)
;
"class A franking percentage"
means:
(a) in relation to a class A franked dividend - the percentage specified in the declaration made under subsection 160AQF(1) in relation to the dividend; or
(b) in relation to a dividend (including a dividend that is not a frankable dividend) no part of which has been franked in accordance with subsection 160AQF(1) - 0%;
"class A franking surplus"
means a surplus calculated under subsection
160APJ(1)
;
"class A potential rebate amount"
means an amount that would be a potential rebate amount if:
(a) each reference in the definition of ``potential rebate amount'' to a franked dividend were, by express provision, confined to a class A franked dividend; and
(b) each reference in that definition to a flow-on franking amount were, by express provision, confined to a class A flow-on franking amount; and
(c) each reference in that definition to a potential rebate amount were, by express provision, confined to a class A potential rebate amount;
"class B deficit deferral tax"
means tax payable in accordance with section
160AQJB
;
"class B flow-on franking amount"
means an amount that would be a flow-on franking amount if:
(a) a reference in the definition of ``flow-on franking amount'' to a franked dividend were, by express provision, confined to a class B franked dividend; and
(b) a reference in that definition to the flow-on franking amount were, by express provision, confined to a class B flow-on franking amount;
"class B franked amount"
, in relation to a dividend, means so much of the dividend as has been franked in accordance with subsection
160AQF(1AA)
;
"class B franked dividend"
means a dividend the whole or a part of which has been franked in accordance with subsection
160AQF(1AA)
;
"class B franking account assessment"
means the ascertainment of the class B franking account balance and of any class B franking deficit tax payable;
"class B franking account balance"
, in relation to a company, means:
(a) if the company has a class B franking surplus - the amount of that surplus; or
(b) if the company has a class B franking deficit - the amount of that deficit; or
(c) in any other case - nil;
"class B franking deficit"
means a deficit calculated under subsection
160APJ(3)
;
"class B franking deficit tax"
means tax payable in accordance with subsection
160AQJ(1A)
;
"class B franking percentage"
means:
(a) in relation to a class B franked dividend - the percentage specified in the declaration made under subsection 160AQF(1AA) in relation to the dividend; or
(b) in relation to a dividend (including a dividend that is not a frankable dividend) no part of which has been franked in accordance with subsection 160AQF(1AA) - 0%;
"class B franking surplus"
means a surplus calculated under subsection
160APJ(1A)
;
"class B potential rebate amount"
means an amount that would be a potential rebate amount if:
(a) each reference in the definition of ``potential rebate amount'' to a franked dividend were, by express provision, confined to a class B franked dividend; and
(b) each reference in that definition to a flow-on franking amount were, by express provision, confined to a class B flow-on franking amount; and
(c) each reference in that definition to a potential rebate amount were, by express provision, confined to a class B potential rebate amount;
class C conversion time
has the meaning given by section
160ASF
.
class C deficit deferral tax
means tax payable in accordance with section
160AQJC
.
class C exempted amount
, in relation to a dividend, means so much of the dividend as has been franked in accordance with subsection
160AQFA(2)
.
class C exempted dividend
means a dividend to the extent (if any) to which it has been franked in accordance with subsection
160AQFA(2)
.
class C exempting account balance
, in relation to a former exempting company, means:
(a) if the company has a class C exempting surplus - the amount of the surplus; or
(b) if the company has a class C exempting deficit - the amount of the deficit; or
(c) otherwise - nil.
class C exempting deficit
means a deficit calculated under subsection
160AQCND(4)
.
class C exempting surplus
means a surplus calculated under subsection
160AQCND(2)
.
class C flow-on franking amount
means an amount that would be a flow-on franking amount if:
(a) a reference in the definition of flow-on franking amount to a franked dividend were, by express provision, confined to a class C franked dividend; and
(b) a reference in that definition to the flow-on franking amount were, by express provision, confined to a class C flow-on franking amount.
class C franked amount
, in relation to a dividend, means so much of the dividend as has been franked in accordance with subsection
160AQF(1AAA)
.
class C franked dividend
means a dividend to the extent (if any) to which it has been franked in accordance with subsection
160AQF(1AAA)
.
class C franking account assessment
means:
(a) the ascertainment of the class C franking account balance and of any class C franking deficit tax payable; or
(b) the ascertainment of the venture capital sub-account balance within the class C franking account and of any venture capital deficit tax payable.
class C franking account balance
, in relation to a company, means:
(a) if the company has a class C franking surplus - the amount of that surplus; or
(b) if the company has a class C franking deficit - the amount of that deficit; or
(c) in any other case - nil.
class C franking deficit
means a deficit calculated under subsection
160APJ(4)
.
class C franking deficit tax
means tax payable in accordance with subsection
160AQJ(1B)
.
class C franking percentage
means:
(a) in relation to a class C franked dividend - the percentage specified in the declaration made under subsection 160AQF(1AAA) in relation to the dividend; or
(b) in relation to a dividend (including a dividend that is not a frankable dividend) no part of which has been franked in accordance with subsection 160AQF(1AAA) - 0%.
class C franking surplus
means a surplus calculated under subsection
160APJ(1B)
.
class C potential rebate amount
means an amount that would be a potential rebate amount if:
(a) each reference in the definition of potential rebate amount to a franked dividend were, by express provision, confined to a class C franked dividend; and
(b) each reference in that definition to a flow-on franking amount were, by express provision, confined to a class C flow-on franking amount; and
(c) each reference in that definition to a potential rebate amount were, by express provision, confined to a class C potential rebate amount.
"committed future dividends"
, in relation to a company at a particular time (in this definition called the
``current time''
) in a franking year, means:
(a) frankable dividends in respect of which the following conditions are satisfied at the current time:
(i) the amount of the dividends is fixed;
(ii) the rights to be paid the dividends are set out in the company's constituent document;
(iii) the dividends are to be paid after the current time and before the end of the franking year to shareholders in the company; or
(b) frankable dividends that, under a resolution made before or at the current time, are to be paid before the end of the franking year to shareholders in the company, other than dividends having a reckoning day before the current time;
"company tax"
means tax assessed on the taxable income of a company;
(a) an instalment, or other amount, payable under Division 1C of Part VI ; or
(b) a PAYG instalment.
company with higher tax shareholders
, in relation to a tainted share capital account, means a company that is not a company with only lower tax shareholders in relation to the account.
company with only lower tax shareholders
, in relation to a tainted share capital account, means a company whose only shareholders were:
(a) other companies (other than life assurance companies or registered organisations); or
(b) non-residents; or
(c) other companies (other than life assurance companies or registered organisations) and non-residents;
throughout the period beginning when the share capital account most recently became tainted under section 160ARDM and ending when the company makes an election under section 160ARDR or 160ARDW to untaint the account.
"corporate trust dividend"
means a unit trust dividend within the meaning of Division 6B or 6C of Part III;
"corporate trust estate"
means a prescribed trust estate within the meaning of Division 6B or 6C of Part III;
CS/RA component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
"current corporate trust"
, in relation to a year of income, means:
(a) a corporate unit trust in relation to the year of income for the purposes of Division 6B of Part III ; or
(b) a public trading trust in relation to the year of income for the purposes of Division 6C of Part III ;
"data processing device"
means any article or material from which information is capable of being reproduced with or without the aid of any other article or device;
"deficit deferral amount"
means a class A deficit deferral amount (see subsection160AQJA(2)), a class B deficit deferral amount (see subsection
160AQJB(2)
) or a class C deficit deferral amount (see subsection
160AQJC(2)
).
"deficit deferral tax"
means class A deficit deferral tax, class B deficit deferral tax or class C deficit deferral tax.
"deficit deferral tax assessment"
means the ascertainment, under section
160ARHA
or
160ARK
, of deficit deferral tax payable by a company;
"director"
, in relation to a company, includes any person occupying or acting in the position of director of the company, by whatever name called and whether or not validly appointed to occupy, or duly authorised to act in, the position;
"dividend statement"
means a statement under section
160AQH
,
160AQUB
,
160AQUC
or
160AQUD
;
"dividend streaming arrangement"
, in relation to a company (in this definition called the
``first company''
), means an arrangement where the first company entered into or carried out the arrangement or any part of the arrangement and either:
(a) both of the following conditions are satisfied:
(i) a shareholder in another company (the ``target shareholder'' ) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any choice or selection;
(ii) the exercise of the choice or selection, or the failure to exercise the choice or selection, has the effect of determining, to any extent, whether the first company will pay one or more franked dividends to a shareholder in the first company, being an upstream entity in relation to the target shareholder, in substitution, in whole or in part, for the payment, or proposed payment, by that other company of one or more unfranked dividends to the target shareholder; or
(b) both of the following conditions are satisfied:
(i) a shareholder in the first company (the ``first shareholder'' ) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any choice or selection;
(ii) the exercise of the choice or selection, or the failure to exercise the choice or selection, has the effect of determining, to any extent, any or all of the following:
(A) whether the first company will pay an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this sub-subparagraph called the ``scheme dividend'' ) to the first shareholder in substitution, in whole or in part, for the payment, or proposed payment, of one or more franked dividends, being dividends whose actual or proposed franking percentage exceeds the franking percentage of the scheme dividend;
(AA) whether the first company will pay an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this sub-subparagraph called the ``scheme dividend'' ) to another shareholder in the first company, being an upstream entity in relation to the first shareholder, in substitution, in whole or in part, for the payment, or proposed payment, to the first shareholder of one or more franked dividends, being dividends whose actual or proposed franking percentage exceeds the franking percentage of the scheme dividend;
(B) whether the first company will issue one or more tax-exempt bonus shares to the first shareholder in substitution, in whole or in part, for the payment, or proposed payment, of one or more franked dividends;
(BA) whether the first company will issue one or more tax-exempt bonus shares to another shareholder in the first company, being an upstream entity in relation to the first shareholder, in substitution, in whole or in part, for the payment, or proposed payment, to the first shareholder of one or more franked dividends;
(C) whether another company will pay an unfranked dividend or a partly franked dividend to a shareholder in that other company in substitution, in whole or in part, for the payment, or proposed payment, by the first company of one or more franked dividends to the first shareholder;
(D) whether the first company will pay one or more franked dividends to the first shareholder in substitution, in whole or in part, for the payment, or proposed payment, by another company of one or more unfranked dividends to a shareholder in that other company;
effectively owned by prescribed persons
has the meaning given by section
160APHBB
.
eligible continuing substantial shareholder
has the meaning given by section
160APHBJ
.
eligible employee share scheme
: the question whether a share was acquired under an eligible employee share scheme is to be determined in accordance with section
160APHBH
.
"eligible year of income"
means the year of income commencing on 1 July 1986 or a subsequent year of income;
entity
has the same meaning as in the
Income Tax Assessment Act 1997
.
"estimated class A debit"
means an estimated class A debit specified in an estimated class A debit determination;
"estimated class A debit determination"
means a determination made by the Commissioner under subsection
160AQD(1)
;
"estimated class B debit"
means an estimated class B debit specified in an estimated class B debit determination;
"estimated class B debit determination"
means a determination made by the Commissioner under subsection 160AQDA(1);
estimated class C debit
means an estimated class C debit specified in, an estimated class C debit determination.
estimated class C debit determination
means a determination made by the Commissioner under subsection
160AQDAA(1)
.
(a) an estimated class A debit; or
(b) an estimated class B debit; or
(c) an estimated class C debit; or
(d) an estimated venture capital debit.
estimated debit determination
means:
(a) an estimated class A debit determination; or
(b) an estimated class B debit determination; or
(c) an estimated class C debit determination; or
(d) an estimated venture capital debit determination.
estimated venture capital debit
means an estimated venture capital debit specified in an estimated venture capital debit determination.
estimated venture capital debit determination
means a determination made by the Commissioner under section
160ASEK
.
exempted amount
, in relation to a dividend, means so much of the dividend as has been franked in accordance with section
160AQFA
.
exempted dividend
means a dividend to the extent (if any) to which it has been franked in accordance with section
160AQFA
.
exempting company
has the meaning given by section
160APHBA
.
exempting credit
means a class A exempting credit or a class C exempting credit.
exempting debit
means a class A exempting debit or a class C exempting debit.
exempt institution
means an entity whose ordinary and statutory income (within the meaning of the
Income Tax Assessment Act 1997
) are exempt from income tax because of Division 50 of that Act.
finance arrangement
has the same meaning as in section
45ZA
.
fixed trust
has the same meaning as in Schedule 2F.
"flow-on franking amount"
means:
(a) in relation to a trust amount - so much of the trust amount as is attributable to:
(i) a franked dividend included in the assessable income of the trust estate;
(ii) the flow-on franking amount in relation to another trust amount included in the assessable income of the trust estate; or
(iii) the flow-on franking amount in relation to a partnership amount that is included in, or allowed as a deduction from, the assessable income of the trust estate; and
(b) in relation to a partnership amount - so much of the partnership amount as is attributable to:
(i) a franked dividend included in the assessable income of the partnership; or
(ii) the flow-on franking amount in relation to a trust amount included in the assessable income of the partnership;
"foreign tax credit"
means a credit within the meaning of Division
19
of Part
III
;
former exempting company
has the meaning given by section
160APHBE
.
(a) a dividend within the meaning of section 6 ; or
(aaa) a non-share dividend; or
(aa) a share that is taken to be a dividend under subsection 6BA(5) ; or
(b) a distribution that is deemed to be a dividend by subsection 47(1) otherwise than by the operation of subsection 47(2A) ; or
(ba) if any of the purchase price in respect of the buy-back of a share is taken by section 159GZZZP to be a dividend:
(i) where the purchase price exceeds the amount that would be the market value of the share at the time of the buy-back if the buy-back did not take place and was never proposed to take place - the amount that is taken to be a dividend, reduced by the amount of the excess; or
(ii) in any other case - the amount that is taken to be a dividend; or
(bb) an amount that is taken to be a dividend under section 375-872 of the Income Tax Assessment Act 1997 (which is about film licensed investment companies);
being in any case a dividend paid by a company to a shareholder on or after 1 July 1987, but does not include any of the following:
(c) a dividend for which the reckoning day is before 1 July 1987;
(d) a dividend for which a deduction is allowable under section 120 ;
(e) a dividend to which paragraph 24J(2)(a) applies that is deemed by section 24J to be derived from sources in a prescribed Territory (as defined in paragraph 24BB(a));
(f) a dividend that is paid in respect of a non-equity share;
(g) a dividend that is taken by subsection 46M(3) or paragraph 46M(4)(a) not to be a frankable dividend;
(ga) a non-share dividend that is taken by section 160APAAAA not to be a frankable dividend;
(gb) a non-share dividend that is taken by section 160APAAAB not to be a frankable dividend;
(h) an amount taken to be a dividend under Division 7A of Part III .
"franked amount"
, in relation to a dividend, means so much of the dividend as has been franked in accordance with section
160AQF
;
franked dividend
means a dividend to the extent (if any) to which it has been franked in accordance with section
160AQF
.
"franking account assessment"
means a class A franking account assessment, a class B franking account assessment or a class C franking account assessment.
(Omitted by No 118 of 1993)
"franking additional tax"
means additional tax payable under Division 11;
"franking additional tax assessment"
means the ascertainment of franking additional tax;
(a) a franking account assessment; or
(b) a franking additional tax assessment; or
(c) a deficit deferral tax assessment;
"franking credit"
means a class A franking credit, a class B franking credit or a class C franking credit.
"franking debit"
means a class A franking debit, a class B franking debit or a class C franking debit.
(Omitted by No 118 of 1993)
(a) class A franking deficit tax; or
(b) class B franking deficit tax; or
(c) class C franking deficit tax; or
(d) venture capital deficit tax.
(a) in relation to a franked dividend - the sum of:
(i) the class A franking percentage of the dividend; and
(ii) the class B franking percentage of the dividend; and
(iii) the class C franking percentage of the dividend; or
(b) in relation to an unfranked dividend - 0%.
(Omitted by No 118 of 1993)
"franking year"
, in relation to a company, means:
(a) if the Commissioner determines under section 160APH that a period is to be treated as a franking year in relation to the company - that period;
(b) if paragraph (a) does not apply and the company is an early balancing company for the purposes of subsection 221AB(1) - the substituted instalment period referred to in that subsection; or
(c) in any other case - a financial year;
"general company tax rate"
means the rate of tax imposed on taxable incomes of companies, other than companies that are registered organizations, life assurance companies or companies that are PDFs throughout the last day of the year of income;
general fund component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
(Repealed by No 89 of 2000)
interest
, in relation to shares or other property, has the meaning given by section
160APHD
.
"lender"
, in relation to a securities lending arrangement, has the meaning given by subsection
26BC(3)
;
"liability reduction action"
, in relation to a company, means action seeking a reduction in an amount of company tax;
(Repealed by No 89 of 2000)
member of the same effectively wholly-owned group of companies
has the meaning given by section
160APHBI
.
"mutual life assurance company"
(Repealed by No 89 of 2000)
NCS component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
(Repealed by No 62 of 1997)
"off-market purchase"
has the same meaning as in Division
16K
of Part
III
;
"offset"
means an amount applied in accordance with Subdivision C of Division 5 in reduction of company tax payable by a company;
"offset determination"
means a determination under Subdivision C of Division 5 of the entitlement of a company to an offset;
"on-market purchase"
has the same meaning as in Division
16K
of Part
III
;
"ordinary assessment"
means an assessment under this Act other than this Part;
"ordinary return"
means a return under this Act other than this Part;
"original assessment date"
means:
(a) in relation to a franking assessment other than an amended assessment - the day on which the assessment was made; and
(b) in relation to a franking assessment that is the first or a subsequent amendment of an assessment to which paragraph (a) applies - the day on which the original assessment was made;
"original company tax assessment"
means an assessment, other than an amended assessment, of company tax;
(Repealed by No 89 of 2000)
"partly franked dividend"
means a dividend only part of which has been franked in accordance with section
160AQF
;
"partnership amount"
means an amount included in, or allowed as a deduction from, the assessable income of a partner under section
92
;
pay
, in relation to a PAYG instalment or company tax, has the meaning given by section
160APBB
.
PAYG instalment
has the same meaning as in the
Income Tax Assessment Act 1997
.
PAYG instalment variation credit
means a credit under section
45-215
or
45-420
in Schedule
1
to the
Taxation Administration Act 1953
.
(Repealed by No 73 of 2001)
"potential rebate amount"
means:
(a) in relation to a trust amount (in this paragraph called the ``current trust amount'' ):
(i) where the flow-on franking amount in relation to the current trust amount is attributable to a franked dividend included in the assessable income of the trust estate - the amount calculated in accordance with the formula:
PR × CF
TF
where:
CF is the number of dollars in the flow-on franking amount in relation to the current trust amount; PR is the amount included in the assessable income of the trust estate under section 160AQT in relation to the franked dividend; and TF is the number of dollars in so much of the net income of the trust estate as is attributable to the franked dividend;
(ii) where the flow-on franking amount in relation to the current trust amount is attributable to the flow-on franking amount in relation to another trust amount (in this subparagraph called the ``earlier trust amount'' ) - the amount calculated in accordance with the formula:
EPR × CF
TF
where:
CF is the number of dollars in the flow-on franking amount in relation to the current trust amount; EPR is the potential rebate amount in relation to the earlier trust amount; and TF is the number of dollars in so much of the net income of the trust estate as is attributable to the flow-on franking amount in relation to the earlier trust amount; or
(iii) where the flow-on franking amount in relation to the current trust amount is attributable to the flow-on franking amount in relation to a partnership amount - the amount calculated in accordance with the formula:
PR × CF
TF
where:
CF is the number of dollars in the flow-on franking amount in relation to the current trust amount; PR is the potential rebate amount in relation to the partnership amount; and TF is the number of dollars in so much of the net income of the trust estate as is attributable to the flow-on franking amount in relation to the partnership amount; or
(b) in relation to a partnership amount:
(i) where the flow-on franking amount in relation to the partnership amount is attributable to a franked dividend included in the assessable income of the partnership - the amount calculated in accordance with the formula:
PR × CF
TF
where:
CF is the number of dollars in the flow-on franking amount in relation to the partnership amount; PR is the amount included in the assessable income of the partnership under section 160AQT in relation to the franked dividend; and TF is the number of dollars in so much of the net income of the partnership or of the partnership loss as is attributable to the franked dividend; or
(ii) where the flow-on franking amount in relation to the partnership amount is attributable to the flow-on franking amount in relation to a trust amount - the amount calculated in accordance with the formula:
PR × CF
TF
where:
CF is the number of dollars in the flow-on franking amount in relation to the partnership amount; PR is the potential rebate amount in relation to the trust amount; and TF is the number of dollars in so much of the net income of the partnership or of the partnership loss as is attributable to the flow-on franking amount in relation to the trust amount;
prescribed person
has the meaning given by section
160APHBF
or
160APHBG
.
qualifying SME investment
means an SME investment that is made in accordance with Division 1 of Part 4 of the
Pooled Development Funds Act 1992
.
RBA
has the same meaning as in Part
IIB
of the
Taxation Administration Act 1953
.
"reckoning day"
, in relation to a dividend paid to a shareholder in a company, means:
(a) if the dividend is paid under a resolution under which other dividends are payable to shareholders in the company - the day on which the first dividend is paid under that resolution; or
(b) in any other case - the day on which the dividend is paid;
refund
, in relation to a company tax instalment or company tax, has the meaning given by section
160APBD
.
"registered organization"
has the same meaning as in Division
8A
of Part
III
;
"resident trust estate"
, in relation to a year of income, means a trust estate that is a resident unit trust in relation to the year of income for the purposes of Division 6B or 6C of Part III;
"resolution"
, in relation to the payment of dividends to a shareholder in a company, means:
(a) an authorisation;
(b) a declaration;
(c) a resolution; or
(d) an agreement;
given or made by:
(e) the company; or
(f) all or any of the directors of the company;
in accordance with the rules governing the payment of dividends by the company, that those dividends be paid;
"scheme"
has the same meaning as in section
177A
;
section 124ZZB SME assessable income
for a PDF for a year of income is the assessable income allocated to the PDF's SME assessable income for the year of income under section
124ZZB
.
"securities dealer"
has the same meaning as in section
202A
;
"securities lending arrangement"
means an agreement covered by subsection
26BC(3)
;
shareholders' funds income
, in relation to a year of income, means income that is:
(a) derived in that year of income; and
(b) included in the shareholders' funds of the company on or before the day on which the company's company tax in respect of that year of income is assessed.
SME investment
has the same meaning as in section
124ZS
.
"special life company tax rate"
means the rate of tax specified in paragraph
23(4A)(b)
of the
Income Tax Rates Act 1986
;
standard component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
tainted share capital account
means a share capital account that is tainted under section
160ARDM
.
tainting amount
means the sum of:
(a) the amount transferred to a company's share capital account when the share capital account most recently became tainted under section 160ARDM ;and
(b) if the company subsequently transferred one or more further amounts to its share capital account - that further amount or those further amounts.
"taxation officer"
means a person exercising powers, or performing functions under, pursuant to or in relation to this Act or the regulations;
tax-exempt bonus share
, in relation to a company, means a share issued by the company in the circumstances mentioned in subsection
6BA(1)
.
(a) in relation to the taking of liability reduction action by a company:
(i) if the action is a request for consideration of a matter by a particular court or tribunal:
(A) if proceedings in relation to the matter terminate in a manner favourable to the company - the time of service by the Commissioner of a notice of an assessment or determination made by the Commissioner giving effect to the determination of the matter by that court or tribunal; or
(B) in any other case - the time when that matter is determined by that court or tribunal; or
(ii) if the action is a request for consideration of a matter by the Commissioner:
(A) if the Commissioner makes a decision on the matter in a manner favourable to the company - the time of service by the Commissioner of a notice of an assessment or determination made by the Commissioner giving effect to the Commissioner's decision on the matter; or
(B) in any other case - the time of service by the Commissioner of a notice of the Commissioner's decision on that matter;
(aa) in relation to the payment of a company tax instalment that is not a PAYG instalment in respect of a year of income - the earlier of:
(i) the time at which the company receives an amount as a refund of that payment under section 221AZL or 221AZQ ; and
(ii) whichever of the following is applicable:
(A) if the company is required to make a payment under section 221AZT in respect of the year of income - the day on which that payment is made;
(B) in any other case - the day that would have been applicable under paragraph 166A(2)(b) if the company had been required to make such a payment under section 221AZT ; or
(ab) in relation to the payment of a company tax instalment that is a PAYG instalment in respect of a year of income - the earlier of:
(i) the time at which the company next claims a PAYG instalment variation credit under section 45-215 or 45-420 in Schedule 1 to the Taxation Administration Act 1953 ; or
(ii) the time at which a notice of original company tax assessment is served, or taken to have been served, on the company in respect of that year of income; or
(iii) the time at which the Commissioner next pays the company a refund under section 8AAZLF of the Taxation Administration Act 1953 in response to a request from the company in the approved form; or
(b) in relation to the payment of an initial payment of tax under section 221AP in respect of a year of income - the earlier of the following times:
(i) the time at which the company receives an amount as a refund of that payment under whichever of the following provisions is applicable:
(A) subsection 221AQ(3) ;
(B) subsection 221AR(6) ;
(C) subsection 221AU(4) ;
(ii) whichever of the following is applicable:
(A) if the company is required to make a payment under section 221AZD in respect of the year of income - the day on which that payment is made;
(B) in any other case - on the day that would have been applicable under subparagraph 166A(1)(a)(i) if the company had been required to make such a payment under section 221AZD ; or
(c) in relation to an estimated debit - the termination time ascertained under paragraph (a), (aa) or (b) in relation to the application by the company for the determination by the Commissioner of the debit;
"trust amount"
, in relation to a trust estate, means:
(a) a share of the net income of the trust estate that is included in the assessable income of a beneficiary under section 97 , 98A or 100 ;
(b) a share of the net income of the trust estate in respect of which the trustee is liable to be assessed under section 98 ; or
(c) the net income, or a part of the net income, of the trust estate in respect of which the trustee is liable to be assessed under section 99 or 99A ;
"unfranked dividend"
means a dividend (including a dividend that is not a frankable dividend) no part of which has been franked in accordance with section
160AQF
;
"unit"
means a unit within the meaning of Division 6B or 6C of Part III;
"unitholder"
means a unitholder within the meaning of Division 6B or 6C of Part III;
untainting tax
means tax payable in accordance with section
160ARDT
or
160ARDY
.
"upstream entity"
, in relation to a shareholder in a company, means:
(a) a trustee of a trust estate ( ``top trust'' ) where:
(i) the shareholder benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the top trust; or
(ii) one or more partnerships or trusts are interposed between the top trust and the shareholder; or
(b) a partnership ( ``top partnership'' ) where:
(i) the shareholder is a partner in the top partnership; or
(ii) one or more partnerships or trusts are interposed between the top partnership and the shareholder;
venture capital deficit tax
means tax payable in accordance with the Venture Capital Deficit Tax Act.
Note:
See also section 160ASEN .
Venture Capital Deficit Tax Act
means the
New Business Tax System (Venture Capital Deficit Tax) Act 2000
.
venture capital franked amount
for a dividend means so much of the dividend as has been venture capital franked in accordance with section
160ASEL
.
venture capital franked dividend
means a dividend the whole or a part of which has been venture capital franked in accordance with section
160ASEL
.
venture capital sub-account
means a venture capital sub-account that a PDF maintains within its class C franking account.
Note:
See section 160ASEB .
venture capital sub-account balance
, in relation to a PDF,
means:
(a) if the PDF has a venture capital sub-account surplus - the amount of that surplus; and
(b) if the PDF has a venture capital sub-account deficit - the amount of that deficit; and
(c) in any other case - nil.
venture capital sub-account deficit
means a deficit calculated under subsection
160ASEC(2)
.
venture capital sub-account surplus
means a surplus calculated under subsection
160ASEC(1)
.
"withholding income"
means income to which section
128B
would apply but for paragraph
128B(3)(ga)
.
A non-share dividend paid by an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 is not a frankable dividend if:
(a) the ADI is a resident of Australia; and
(b) the non-share dividend is paid in respect of a non-share equity interest that:
(i) by itself; or
forms part of the ADI's Tier 1 capital either on a solo or consolidated basis (within the meaning of the prudential standards); and
(ii) in combination with one or more schemes that are related schemes (within the meaning of the Income Tax Assessment Act 1997 ) to the scheme under which the interest arises;
(c) the non-share equity interest is issued at or through a permanent establishment of the ADI in a broad-exemption listed country (within the meaning of Part X); and
(d) the funds from the issue of the non-share equity interest are raised and applied solely for one or more permitted purposes (see subsection (2)) in relation to the non-share equity interest. 160APAAAA(2) [Permitted purposes]
The permitted purposes in relation to the non-share equity interest (the relevant interest ) are the following:
(a) the purpose of the business of the ADI carried on at or through the permanent establishment other than the transfer of funds directly or indirectly to:
(i) the Australian head office of the permanent establishment; or
(ii) any connected entity of the ADI that is a resident of Australia; or
(iii) a permanent establishment of the ADI, or of a connected entity of the ADI, located in Australia;
(b) the purpose of redeeming:
(i) a debt interest; or
that is issued, before the relevant interest is issued, at or through the permanent establishment and is held by a connected entity of the ADI that is a resident of Australia;
(ii) a non-share equity interest;
(c) the purpose of returning funds to:
(i) the Australian head office of the permanent establishment; or
if the funds are contributed, before the relevant interest is issued, for use in the business of the ADI carried on at or through the permanent establishment.
(ii) a permanent establishment of the ADI or of a connected entity of the ADI, located in Australia;
(a) a company pays a non-share dividend; and
(b) immediately before the payment, the available frankable profits of the company were less than the amount of the non-share dividend. 160APAAAB(2) [Non-share dividend not frankable]
If the available frankable profits of the company at the relevant time is nil or negative, the non-share dividend:
(a) is not frankable; and
(b) is not a dividend to which paragraph 160AQF(1)(c) , (1AA)(c) or (1AAA)(c) or 160AQFA(1)(c) or (2)(c) or section 160AQG applies.
Example:160APAAAB(3) [Original dividend]A company has no profits except profits from the revaluation of an asset. It pays a non-share dividend to a non-share equity holder. The non-share dividend is not a frankable dividend because the company's available frankable profits at the time of payment is nil.
Note that dividends from asset revaluation reserves are not frankable because of paragraph (g) of the definition of frankable dividend in section 160APA .
In any other case, the non-share dividend (the original dividend ) is taken, for the purposes of the relevant provisions, to consist of 2 separate non-share dividends:
(a) a non-share dividend that is a frankable non-share dividend; and
(b) a non-share dividend that:
(i) is not a frankable non-share dividend; and
(ii) is not a dividend to which paragraph 160AQF(1)(c) , (1AA)(c) or (1AAA)(c) or 160AQFA(1)(c) or (2)(c) or section 160AQG applies.
The relevant provisions are sections 45Z to 46M, this Part and any other provision of this Act whose operation depends on this Part.
160APAAAB(4) [Frankable profits]The amount of the non-share dividend referred to in paragraph (3)(a) is equal to the available frankable profits.
160APAAAB(5) [Difference between original and franked dividends]The amount of the non-share dividend referred to in paragraph (3)(b) is the difference between the original dividend and the frankable dividend referred to in paragraph (3)(a).
160APAAAB(6) [Anticipate frankable profits]A company that pays a non-share dividend may anticipate available frankable profits if:
(a) the company:
(i) has announced the payment of; or
share dividends (the committed share dividends ) after payment of the non-share dividend; and
(ii) is committed or has resolved (formally or informally) to pay;
(b) but for this subsection, subsection (2) or (3) would apply to the non-share dividend mentioned in paragraph (a); and
(c) the company's available frankable profits would be greater than nil at the relevant time if the committed share dividends were ignored; and
(d) it is reasonable to expect that available profits will arise after payment of the non-share dividend and before payment of the committed share dividends; and
(e) it is reasonable to expect that, having regard to the profits mentioned in paragraph (d), the amount of the company's adjusted available frankable profits (see subsection (12A)) immediately after each of the committed share dividends is paid will be greater than nil.
The available frankable profits immediately before the company pays the non-share dividend is then the smallest of the amounts of the adjusted available frankable profits mentioned in paragraph (e).
(Repealed by No 107 of 2003)
A class C franking debit arises for a company if:
(a) the company anticipates available frankable profits under subsection (6); and
(b) the available frankable profits of the company are negative:
(i) immediately after the last of the committed share dividends are paid; or
whichever is the earlier.
(ii) immediately before the end of the franking year following the franking year in which the non-share dividend is paid;
The class C franking debit that arises under subsection (8) is equal to the lesser of:
(a) the amount by which the available frankable profits is below zero; and
(b) the franked amount of the non-share dividend. 160APAAAB(10) [Determining available profits]
In working out the company's available profits for the purposes of subsections (8) and (9), disregard:
(a) any dividends that:
(i) the company announces, or becomes committed to or resolves (formally or informally) to pay after the payment of the non-share dividend; and
(ii) has not been paid; and
(b) any estimate made by the company under subsection (6) after the non-share dividend is paid. 160APAAAB(11) [Application to non-share dividends]
If a company pays a number of non-share dividends at the same time, this section applies as if:
(a) a reference to a non-share dividend were a reference to each of those non-share dividends; and
(b) the reference in paragraph (1)(b) to the amount of the non-share dividend were a reference to the sum of the amounts of the non-share dividends; and
(c) the reference in subsection (4) to the available frankable profits were a reference to the amount worked out using the formula:
|
Amount of the non-share dividend
Sum of the amounts of all those non-share dividends |
× Available frankable profits |
(d) the reference to the amount of the frankable non-share dividend in paragraph (b) of the definition of adjusted expected profits in subsection (7) were a reference to the sum of the amounts of the frankable non-share dividends; and
(e) the reference in paragraph (9)(b) to the franked amount of the non-share dividend were a reference to the sum of the franked amounts of the non-share dividends. 160APAAAB(12) [Available frankable profits]
A company's available frankable profits at a particular time in relation to a non-share dividend is the amount worked out using the formula:
where:
committed share dividends
means the amount of share dividends the company will make at that time, or after that time, if the company has announced their payment, or is committed or has resolved (formally or informally) to pay them.
maximum frankable amount
means the maximum amount of frankable share dividends that the company could pay at that time having regard to its available profits at that time.
undebited non-share dividends
means the sum of the franked amounts of the non-share dividends that:
(a) were not debited to available profits; and
(b) were paid within the preceding 2 franking years or were paid under the same scheme under which the company pays the non-share dividend. 160APAAAB(12A) [Amount of company's adjusted available frankable profits]
A company's adjusted available frankable profits immediately after a committed share dividend is paid is the amount that would be its available frankable profits at that time if all committed share dividends to be paid after that time, and the non-share dividend, were ignored.
In this section:
share dividend
means a dividend that is not a non-share dividend.
In working out the adjusted amount of an amount (the basic amount ), the basic amount is reduced by any reduction amount that arises in relation to the basic amount.
160APAAA(2) [Reduction amount attributable to payment of tax]The reduction amount in relation to a basic amount that is attributable to a payment of tax is the whole, or any part, of the payment that arises as a result of the application or operation of:
(a) subsection 136AD(1) , (2) or (3) or 136AE(1), (2) or (3); or
(b) paragraph 1 or 2 of Article 9 of the Vietnamese agreement or a provision of any other double taxation agreement that corresponds to either of those paragraphs. 160APAAA(2A) [Reduction amount where company is RSA provider]
If the company is an RSA provider, other than one that is a life assurance company, the reduction amount in relation to a basic amount that is attributable to a payment of tax is the whole, or any part, of the payment that is attributable to the RSA business of the company.
The reduction amount in relation to a basic amount that is attributable to:
(a) an amount received as a refund of a payment of tax; or
(b) an amount, in respect of a credit under section 221AZM , applied by the Commissioner against a liability of the company; or
(c) an amount applied by the Commissioner against a liability of the company; or
(d) a reduction mentioned in section 160APZ ;
is the whole, orany part, of the amount or reduction that is attributable to a payment, or a part of a payment, of tax in relation to which subsection (2) or (2A) gave rise to a reduction amount.
The regulations may provide for the method of calculating the amount that is attributable to the RSA business of the company.
If regulations made under subsection (3A) provide for the calculation to include the use of an estimate made by the company, the regulations may also provide that a franking debit, worked out in accordance with the regulations, of a company arises at a particular time if an estimate by the company is incorrect.
If regulations are made under subsection (3A), the regulations may also provide that a franking debit or a franking credit, worked out in accordance with the regulations, of a company arises at a particular time where it is necessary to ensure that the reductions made under this section properly reflect the amount of the taxable income of the company for a year of income that is attributable to the RSA business of the company.
In this section:
double taxation agreement
means an agreement within the meaning of the
International Tax Agreements Act 1953
.
the Vietnamese agreement
has the same meaning as in the
International Tax Agreements Act 1953
.
View history note
A reference in this Part to the carrying out of an arrangement by a person includes a reference to the carrying out of an arrangement by a person together with another person or other persons.
A reference in this Part to a company does not include a reference to a company in the capacity of a trustee.
A reference in this Part to a franking year preceded by a figure referring to 2 years (for example 1995-96 franking year ) is a reference to the franking year of the company:
(a) if the franking year of the company is covered by paragraph (a) or (b) of the definition of franking year - that begins on or after 1 January in the first year referred to in the figure but before 1 January in the second year referred to in that figure; or
(b) if the franking year of the company is covered by paragraph (c) of that definition - that begins on 1 July of the first year referred to in the figure.
For the purposes of this Part, a person pays a PAYG instalment or company tax if and only if:
(a) the person has a liability to pay the instalment or the company tax; and
(b) either:
(i) the person makes a payment to satisfy the liability (in whole or in part); or
(ii) a credit, or an RBA surplus, is applied to discharge or reduce the liability.
Note:
The requirement in paragraph (a) means that the company cannot generate franking credits by making a ``voluntary'' payment of company tax (that is, paying an amount on account of company tax for which the company is not liable at the time when the payment is made).
160APBB(2) [Certain allowable credits]Subparagraph (1)(b)(ii) does not apply to the application of a credit allowable under or by virtue of:
(a) Division 18, 18A or 18B of Part III; or
(b) the International Tax Agreements Act 1953 ; or
(c) section 45-30 , 45-215 or 45-420 in Schedule 1 to the Taxation Administration Act 1953 .
The amount of the PAYG instalment or company tax paid is equal to:
(a) the amount of the liability if it is satisfied in full; or
(b) the amount by which the liability is reduced if it is not satisfied in full. 160APBB(4) [Reduction by amount of excess]
(a) a surplus in an RBA of a company is applied to satisfy a liability of the company to pay a PAYG instalment in respect of a year of income; and
(b) a credit allowable under section 45-30 in Schedule 1 to the Taxation Administration Act 1953 in respect of that year of income is included in the RBA; and
(c) the RBA does not include the liability to pay the PAYG instalment; and
(d) the amount of the credit exceeds the company tax assessed to the company in respect of that year of income;
the amount of the PAYG instalment paid by virtue of the application of the surplus is reduced by the amount of the excess referred to in paragraph (d).
If a company:
(a) is liable to pay a PAYG instalment; and
(b) has a PAYG instalment variation credit;
the PAYG instalment variation credit must be fully applied to reduce the liability for the PAYG instalment before any other credit or payment can be applied to reduce that liability.
For the purposes of this Part, a company receives a refund of a company tax instalment or company tax if and only if:
(a) either:
(i) the company receives an amount as a refund; or
(ii) the Commissioner applies a credit, or an RBA surplus, against a liability or liabilities of the company; and
(b) the refund of the amount, or the application of the credit, represents in whole or in part a return to the company of an amount paid or applied to satisfy the company's liability to pay the company tax instalment or company tax. 160APBD(2) [Amount of refund]
The amount of the refund is so much of the amount refunded or applied as represents the return referred to in paragraph (1)(b).
160APBD(3) [Not refunds]The following are not refunds of a company tax instalment or company tax for the purposes of this Part:
(a) a refund to the extent to which it is referable to a PAYG instalment variation credit;
(b) the application of a PAYG instalment variation credit against a liability of the company.
For the purposes of this Part, a life assurance company's company tax is assessed in respect of a year of income if a notice of an original company tax assessment is served, or taken to have been served, on the company in respect of that year of income.
A reference in this Part to a company includes a reference to the liquidator of a company.
For the purposes of this Part, interim dividends that are to be paid at or before a particular time shall be taken to be payable at or before that time.
A share in a company is taken for the purposes of this Part to be in the same class as another share in the company if the shares have the same, or substantially the same, rights.
160APE(2) [Shares of partners]The shares of all the partners in a partnership that is a corporate limited partnership for the purposes of Division 5A of Part III are taken to constitute the same class of shares.
For the purposes of this Part, a resolution that, but for this section, would be a single resolution in relation to dividends to be paid in respect of shares of 2 or more classes shall be treated as being separate resolutions in relation to the dividends to be paid in respect of the shares of each of those classes.
For the purposes of this Part, a company is sufficiently resident in a year of income if, and only if:
(a) the company is a resident for more than one-half of the year of income; or
(b) the company is a resident at all times during the year of income when the company exists.
For the purpose of ensuring the effective operation of this Part in relation to companies whose accounting periods change, where:
(a) a company that is an early balancing company for the purposes of subsection 221AB(1) adopts a different accounting period, or has an accounting period that commences or ends under section 18A ; or
(b) a company becomes, or ceases to be, an early balancing company for the purposes of that subsection;
the Commissioner may, by notice in writing served on the company, determine that a period specified in the notice shall be treated as a franking year in relation to the company.
The period specified in the notice may:
(a) commence earlier than the date of service of the notice; and
(b) be shorter or longer than a period of 12 months.
For the purposes of this Part, a dividend paid to a shareholder in a company shall be taken to be a dividend paid as part of a dividend stripping operation if, and only if, the payment of the dividend arose out of, or was made in the course of, a scheme that:
(a) was by way of or in the nature of dividend stripping; or
(b) had substantially the effect of a scheme by way of or in the nature of dividend stripping.
This section applies in working out any of the following for the purposes of this Part:
(a) how much of the company tax assessed to a life assurance company in respect of a year of income is attributable to shareholders' funds income for a year of income;
(b) how much of an amount of a reduction or increase in the company tax of a life assurance company in respect of a year of income is attributable to shareholders' funds income for the year of income. 160APHB(2) [Related payments]
Rebates of tax (other than rebates under section 46 or 46A ) are taken to be applied against components of taxable income in the following order:
(a) taxable income referable to income other than shareholders' funds income;
(b) taxable income referable to shareholders' funds income.
A company is taken to be, or to have been, an exempting company at a particular time if:
(a) that time is, or was, as the case may be, a time later than 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997; and
(b) at that time the company is or was, as the case may be, effectively owned by prescribed persons.
A company is taken to be, or to have been, effectively owned by prescribed persons at a particular time if:
(a) at that time:
(i) not less than 95% of the accountable shares in the company; or
are or were held by, or held indirectly for the benefit of, prescribed persons; or
(ii) not less than 95% of the accountable interests in sharesin the company;
(b) paragraph (a) does not apply but it would nevertheless be reasonable to conclude that, at that time, the risks involved in, and the opportunities resulting from, holding accountable shares, or accountable interests in shares, in the company that are not, or were not, held by, or directly or indirectly for the benefit of, prescribed persons are or were substantially borne by, or substantially accrue or accrued to, prescribed persons. 160APHBB(2) [Matters to be regarded]
In deciding whether it would be reasonable to conclude as mentioned in paragraph (1)(b):
(a) regard is to be had to any arrangement in respect of shares (including unissued shares), or in respect of interests in shares, in the company (including any derivatives held or issued in connection with those shares or interests) of which the company is aware; but
(b) no regard is to be had to risks involved in the ownership of shares, or interests in shares, in the company that are substantially borne by any person in the person's capacity as a secured creditor.
The purpose of this section is to identify which shares in a company are relevant in determining whether the company is effectively owned by prescribed persons.
160APHBC(2) [``accountable share'']A share in a company is an accountable share if it is not an excluded share.
160APHBC(3) [When share is excluded share]A share in a company is an excluded share if, having regard to:
(a) the purposes for which the share was issued; and
(b) any special or limited rights connected with, arising from, or attached to:
(i) the share; or
(ii) other shares in the company held by the holder of the share; or
(iii) shares in the company held by persons other than the holder of the share; or
including rights that are conferred or exercisable only if the holder of the shares or interests concerned is, or is not, a prescribed person; and
(iv) interests in any of the above;
(c) the extent to which any such special or limited rights are similar to or differ from the rights that are normally attached to the ownership of ordinary shares in companies; and
(d) the relationship between the value of the share and the value of company; and
(e) any relationship or connection (whether of a personal or business nature) between holders of shares in the company of which the company is aware; and
(f) any arrangement in respect of shares (including unissued shares) in the company, or interests in shares in the company, of which the company is aware;
it would be reasonable to conclude that the share is not relevant in determining whether the company is effectively owned by prescribed persons because holding the share does not involve the holder bearing the risks, or result in the accrual to the holder of the opportunities, of ownership of the company that ordinarily arise from, or are ordinarily attached to, the holding of ordinary shares in a company.
160APHBC(4) [Matter disregarded]In applying subsection (3), the fact that a person is a trustee is to be disregarded.
160APHBC(5) [Persons not prescribed persons]Without limiting subsection (3), a share in a company held by a person who is not a prescribed person is an excluded share if:
(a) it is a finance share; or
(b) it is a dividend access share; or
(c) it does not carry the right to receive dividends; or
(d) it was issued, transferred or acquired for a purpose (other than an incidental purpose) of ensuring that the company is not effectively owned by prescribed persons. 160APHBC(6) [Finance share]
A share is a finance share if:
(a) the share is a non-equity share in the company; or
(b) having regard to the rights attached to the share and to any arrangement with respect to the share of which the company is aware, the share is equivalent to a debt owed by the company to the holder of the share.
A share to which subsection (6) does not apply is a finance share if:
(a) the manner in which the dividends payable in respect of the share are calculated, and the conditions applying to the payment of such dividends, indicate that the dividends paid are equivalent to the receipt by the person to whom they are paid of interest or an amount in the nature of or similar to interest; or
(b) the capital invested by the holder of the share will be redeemed, or, because of an arrangement between the holder and the company or an associate of the company, it is reasonable for the holder to expect that the capital will be redeemed, for an amount that is not less than, or for property (including other shares in the company) the value of which is not less than, the amount paid for the share; or
(c) the share is redeemable by the company by payment of a lump sum or by the transfer of property, or the share has a preferred right to a repayment of capital on a winding up, where the amount of the lump sum or the value of the property, or the amount of the capital to be repaid, as the case may be, is to be calculated by reference to an implicit interest rate. 160APHBC(8) [``dividend access share'']
A share in a company is a dividend access share if, having regard to:
(a) the terms of the issue of the share, including any guarantee of payment of dividends; and
(b) the amounts of the dividends paid on the share relative to the issue price of the share; and
(c) whether there is any guaranteed rate at which franked dividends are to be paid on the share; and
(d) the duration of the period within which the share was issued; and
(e) the rights attached to other shares in the company; and
(f) any other relevant matters;
it could be concluded that the share was issued only for the purpose of paying dividends to the holder of the share.
The purpose of this section is to identify which interests in shares in a company are relevant in determining whether the company is effectively owned by prescribed persons.
160APHBD(2) [``accountable interest'']An interest in a share in a company is an accountable interest if it is not an excluded interest.
160APHBD(3) [``excluded interest'']An interest in a share in a company is an excluded interest if, having regard to:
(a) the purposes for which the interest was granted; and
(b) the nature of the interest; and
(c) any special or limited rights connected with or arising from:
(i) the interest; or
(ii) other shares, or interests in other shares, in the company held by the holder of the interest; or
including rights that are conferred or exercisable only if the holder of the interests or shares concerned is, or is not, a prescribed person; and
(iii) shares, or interests in shares, in the company held by persons other than the holder of the interest;
(d) the extent to which the interest is similar to or differs from beneficial ownership; and
(e) the relationship between the value of the interest and the value of the company; and
(f) any relationship or connection (whether of a personal or business nature) between holders of interests in shares in the company, and the holders of shares in the company, of which the company is aware; and
(g) any arrangement in respect of shares (including unissued shares) in the company, or interests in shares in the company, of which the company is aware;
it would be reasonable to conclude that the interest is not relevant in determining whether the company is effectively owned by prescribed persons because holding the share to which the interest relates does not involve the holder bearing the risks, or result in the accrual to the holder of the opportunities, of ownership of the company that ordinarily arise from, or are ordinarily attached to, the holding of ordinary shares in a company.
160APHBD(4) [Trustees]In applying subsection (3), the fact that a person is a trustee is to be disregarded.
160APHBD(5) [Excluded interest on other grounds]Without limiting subsection (3), an interest in an accountable share in a company is also an excluded interest if it was granted or otherwise created, or was transferred or acquired, for a purpose (other than an incidental purpose) of ensuring that the company is not effectively owned by prescribed persons.
Subject to subsection (2), a company is a former exempting company if it has at any time ceased to be an exempting company and is not again an exempting company.
160APHBE(2) [Ownership by prescribed persons]If a company that, at any time whether before or after the commencement of this section, became or becomes effectively owned by prescribed persons ceased or ceases to be so effectively owned within 12 months after that time, the company is not taken, by so ceasing, to have become, or to become, a former exempting company.
A company is a prescribed person in relation to another company if:
(a) the first company is a non-resident; or
(b) were the first company to receive a dividend paid by the other company, the dividend would be exempt income of the company for the purposes of this Part. 160APHBF(2) [Trustees]
A trustee is a prescribed person in relation to a company if:
(a) all the beneficiaries in the trust are prescribed persons under other provisions of this section; or
(b) were the trustee to receive a dividend paid by the company, the dividend would be exempt income of the trust estate for the purposes of this Part. 160APHBF(3) [Partnerships]
A partnership is a prescribed person in relation to a company if:
(a) all the partners are prescribed persons under other provisions of this section; or
(b) were the partnership to receive a dividend paid by the company, the dividend would be exempt income of the partnership for the purposes of this Part. 160APHBF(4) [Individual (not trustee)]
An individual (other than a trustee) is a prescribed person in relation to a company if:
(a) he or she is a non-resident; or
(b) were he or she to receive a dividend paid by the company, the dividend would be exempt income of the individual for the purposes of this Part. 160APHBF(5) [Commonwealth, States, Territories etc]
The Commonwealth, each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island are prescribed persons in relation to any company.
160APHBF(6) [Exempt institutions]An exempt institution whose exempt status is disregarded under subsection 160ARDAB(1) cannot be a prescribed person in relation to a company under this section.
This section applies to a person that:
(a) is a company, a trustee, or a partnership, that holds shares (whether accountable shares or excluded shares) or interests in shares (whether accountable interests or excluded interests) in a company (the relevant company ); and
(b) is not a prescribed person under section 160APHBF . 160APHBG(2) [Companies]
A company (the shareholding company ) that holds shares, or interests in shares, in the relevant company is taken to be a prescribed person in relation to the relevant company if the risks involved in, and the opportunities resulting from, holding the shares or interests are substantially borne by, or substantially accrue to, as the case may be, one or more prescribed persons.
160APHBG(3) [Trustees - risks and opportunities]A trustee of a trust who holds shares, or interests in shares, in the relevant company is taken to be a prescribed person in relation to the relevant company if the risks involved in, and the opportunities resulting from, holding the shares or interests are substantially borne by, or substantially accrue to, as the case may be, one or more prescribed persons.
160APHBG(4) [Trustees - control and beneficiaries]A trustee of a trust who holds shares, or interests in shares, in the relevant company is taken to be a prescribed person in relation to the relevant company if:
(a) unless subsection (7) applies, the trust is controlled by one or more persons who are prescribed persons; or
(b) all the beneficiaries who are presently entitled to, or during the relevant year of income become presently entitled to, income from the trust are prescribed persons. 160APHBG(5) [Exercise of powers]
In determining whether subsection (3) or (4) applies in respect of a trust that is controlled by a person, regard is to be had to the way in which the person, or any associate of the person, exercises powers in relation to the trust.
160APHBG(6) [Control of a trust](a) the person has the power, either directly, or indirectly through one or more interposed entities, to control the application of the income, or the distribution of the property, of the trust; or
(b) the person has the power, either directly, or indirectly through one or more entities, to appoint or remove the trustee of the trust; or
(c) the person has the power, either directly, or indirectly through one or more entities, to appoint or remove beneficiaries of the trust; or
(d) the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act according to the directions, instructions or wishes of the person or of an associate of the person. 160APHBG(7) [Where para (4)(a) does not apply]
Paragraph (4)(a) does not apply in relation to a trust if some of the beneficiaries receiving income from the trust are not prescribed persons and the Commissioner considers that it is reasonable to conclude that the risks involved in, and the opportunities resulting from, holding the shares and interests in the relevant company are substantially borne by, or substantially accrue to, as the case may be, one or more persons who are not prescribed persons.
160APHBG(8) [Partnerships]A partnership that holds shares, or interests in shares, in the relevant company is taken to be a prescribed person in relation to the relevant company if the risks involved in, and the opportunities resulting from, holding the shares or interests are substantially borne by, or substantially accrue to, as the case may be, one or more prescribed persons.
160APHBG(9) [Companies]If any of the prescribed persons referred to in subsection (2), (3), (4) or (6) is a company, that subsection applies even if the risks involved in, and the opportunities resulting from, holding any of the shares, or interests in shares, in that company are substantially borne by, or substantially accrue to, as the case may be, one or more persons who are not prescribed persons.
160APHBG(10) [Exempt institutions]An exempt institution whose exempt status is disregarded under subsection 160ARDAB(1) cannot be taken to be a prescribed person in relation to a company under this section.
A share in a company is taken to be acquired by a person under an eligible employee share scheme if:
(a) the share is acquired by the person in respect of, or for or in relation directly or indirectly to, any employment of the person by the company or by a company that is a subsidiary of the company; and
(b) all the shares available for acquisition under the scheme are ordinary shares or are preference shares to which are attached substantially the same rights as are attached to ordinary shares; and
(c) immediately after the acquisition of the shares:
(i) the person does not hold a legal or beneficial interest in more than 5% of the shares in the company; and
(ii) the person is not in a position to control, or control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company; and
(d) the share is not a non-equity share.
The question whether a company is a subsidiary of another company is to be determined in the same way as the question whether a corporation is a subsidiary of another corporation is determined under the Corporations Act 2001 .
2 companies are members of the same effectively wholly-owned group of companies on a particular day if:
(a) throughout that day, not less than 95% of the accountable shares in each of the companies, and not less than 95% of the accountable interests in shares in each of the companies, are held by, or are held indirectly for the benefit of, the same persons; or
(b) paragraph (a) does not apply but it would nevertheless be reasonable to conclude, having regard to the matters mentioned in subsection (2), that, throughout that day, the risks involved in, and the opportunities resulting from, holding accountable shares, or accountable interests in shares, in each of the companies are substantially borne by, or substantially accrue to, the same persons. 160APHBI(2) [Matters to be regarded]
The matters to which regard is to be had as mentioned in paragraph (1)(b) are:
(a) any special or limited rights attaching to accountable shares, or accountable interests in shares, in each of the companies held by persons other than the persons mentioned in paragraph (1)(b) or their associates; and
(b) any special rights attaching only to accountable shares, or accountable interests in shares, in each of the companies held by the persons mentioned in paragraph (1)(b) or their associates; and
(c) the respective proportions:
(i) that accountable shares in each of the companies held by the persons mentioned in paragraph (1)(b) or their associates, and other accountable shares in the company concerned, bear to all the accountable shares in that company; and
(ii) that accountable interests in shares in each of the companies held by the persons mentioned in paragraph (1)(b) or their associates, and other accountable interests in shares in the company concerned, bear to all the accountable interests in shares in that company; and
(d) the respective proportions that:
(i) the total value of accountable shares in each of the companies held by the persons mentioned in paragraph (1)(b) or their associates, and the total value of other accountable shares in the company concerned, bear to the total value of all the accountable shares in that company; and
(ii) the total value of accountable interests in shares in each of the companies held by the persons mentioned in paragraph (1)(b) or their associates, and the total value of other accountable interests in shares in the company concerned, bear to the total value of all the accountable interests in shares in that company; and
(e) the purposes for which accountable shares, or accountable interests in shares, in each of the companies were issued or granted to persons other than the persons mentioned in paragraph (1)(b) or their associates; and
(f) any arrangement in respect of accountable shares, or accountable interests in shares, in each of the companies held by persons other than the persons mentioned in paragraph (1)(b) or their associates (including any derivatives held or issued in connection with those shares or interests) of which the company concerned is aware.
A shareholder is an eligible continuing substantial shareholder in relation to a dividend paid by a former exempting company (the relevant former exempting company ) if the following provisions apply.
160APHBJ(2) [Relevant times]At both of the following times:
(a) the time when the dividend was paid; and
(b) the time immediately before the relevant former exempting company ceased to be an exempting company;
the shareholder:
(c) was entitled to not less than the prescribed percentage of:
(i) if the voting shares (as defined in the Corporations Act 2001 ) in the relevant former exempting company are not divided into classes - those voting shares; or
(ii) if the voting shares (as so defined) in the relevant former exempting company are divided into 2 or more classes - the shares in one of those classes; and
(d) was a person referred to in one or more of the following subparagraphs:
(i) a non-resident; or
(ii) a life assurance company; or
(iii) an exempting company; or
(iv) a former exempting company; or
(v) a trustee of a trust in which an interest was held by a person referred to in any of subparagraphs (i) to (iv); or
(vi) a partnership in which an interest was held by a person referred to in any of subparagraphs (i) to (iv).
If the assumptions set out in subsection (4) are made:
(a) if the shareholder was a person referred to in any of subparagraphs (2)(d)(i) to (iv) - the shareholder; or
(b) if the shareholder was a trustee of a trust or a partnership, being a trust or partnership in which a person referred to in any of those subparagraphs held an interest - the holder of the interest;
would (if a non-resident) be exempt from dividend withholding tax on the dividend or (if a resident) be entitled to a franking credit or a franking rebate in respect of the dividend.
160APHBJ(4) [Assumptions]The assumptions referred to in subsection (3) are that:
(a) the relevant former exempting company was an exempting company at the time it paid the dividend; and
(b) the dividend was a franked dividend paid to the shareholder; and
(c) if the shareholder was a former exempting company - the shareholder was an exempting company; and
(d) if the shareholder was a trustee of a trust or partnership in which a former exempting company had an interest - that former exempting company was an exempting company. 160APHBJ(5) [Determination of entitlement]
The question whether a person was entitled at a particular time to not less than the prescribed percentage of voting shares or a class of voting shares in a company is to be determined in the same way as that question is determined under subsection 708(5) of the Corporations Act 2001 .
A person is taken to hold an interest in a trust if:
(a) the person is a beneficiary under the trust; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the trustee. 160APHBJ(7) [Holding of interest in partnership]
A person is taken to hold an interest in a partnership if:
(a) the person is a partner in the partnership; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the partnership.
The object of this Division is to set out the circumstances in which a taxpayer can qualify for a franking credit, a franking rebate, or the intercorporate dividend rebate, in respect of a dividend paid on shares or in respect of a distribution from a partnership or trust that is derived from such a dividend.
In this Division, unless the contrary intention appears:
associate
has the meaning given by section
318
but includes:
(a) in relation to a trustee - the controller of the trust; and
(b) in relation to a company that is a member of a wholly-owned group (determined in accordance with Subdivision 975-W of the Income Tax Assessment Act 1997 ) - any other company that is a member of the group.
benchmark portfolio of shares
has the meaning given by section
160AQZH
.
closely held fixed trust
: a trust is a
closely held fixed trust
at a particular time if, at that time, it is a fixed trust and not more than 20 entities (as defined in section
960-100
of the
Income Tax Assessment Act 1997
and counting entities who are associates as one entity) have interests in the trust that together entitle them to not less than 75% of:
(a) the beneficial interests in the income of the trust; or
(b) the beneficial interests in the capital of the trust.
controller
, in relation to a trust, means a person:
(a) who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of more than 50% of the interests in the trust property or in the trust income; or
(b) who has power to appoint or remove the trustee of the trust; or
(c) according to whose directions, instructions or wishes, the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.
distribution
: a distribution in respect of an interest in shares is taken to be made in the circumstances specified in subsection
177EA(15)
.
employee share scheme security
means:
(a) a share that is, or except for subsections 139C(3) and (4) would be, a qualifying share for the purposes of Division 13A of Part III ; or
(b) a share acquired as a result of the exercise of a qualifying right within the meaning of Division 13A of Part III ; or
(c) an interest in a share where:
(i) it is an interest in a share referred to in paragraph (a) or (b); and
(ii) if it is defeasible or subject to forfeiture - it becomes indefeasible, or ceases to be subject to forfeiture (other than forfeiture resulting from fraud, dishonesty or defalcation), as the case may be, within 10 years after it was issued; and
(iii) if it is an interest as a beneficiary of a trust - the sole activities of the trust are obtaining shares, or rights to acquire shares, and providing those shares or rights to employees of a company or to associates of those employees.
ex dividend
has the meaning given by section
160APHE
.
fixed trust
has the same meaning as in Schedule 2F.
franked distribution
has the meaning given by subsection
177EA(16)
.
interest
, in relation to shares or other property, means any legal or equitable interest in the shares or other property.
materially diminish
has the meaning given by section
160APHM
.
non-fixed trust
has the same meaning as in Schedule 2F.
position
, in relation to shares or an interest in shares, has the meaning given by section
160APHJ
as that meaning is affected by sections
160APHK
and
160APHL
.
preference shares
in a company means shares in the company that:
(a) have a fixed dividend entitlement or, having regard to the terms of their issue, are likely to have a fixed dividend return; or
(b) having regard to the terms of their issue and other relevant matters, are less risky than ordinary shares in the company.
prescribed person
, in relation to a unit trust, has the meaning given by section
160APHS
.
primary qualification period
, in relation to a taxpayer in relation to shares or an interest in shares, means the period beginning on the day after the day on which the taxpayer acquired the shares or interest and ending:
(a) if the shares are not preference shares - on the 45th day after the day on which the shares or interest became ex dividend ; or
(b) if the shares are preference shares - on the 90th day after the day on which the shares or interest became ex dividend .
qualification period
, in relation to a taxpayer in relation to shares or an interest in shares, means the primary qualification period or the secondary qualification period in relation to the taxpayer in relation to the shares or interest.
qualified person
, in relation to a dividend paid on shares, has the meaning given by section
160APHO
,
160APHP
,
160APHQ
,
160APHR
or
160APHT
as that meaning is affected by section
160APHU
.
rebateable distribution
means a distribution to which section
45Z
applies and in respect of which the taxpayer is entitled to a rebate under section
46
or
46A
.
rebateable dividend
means a dividend for which the taxpayer is entitled to a rebate under section
46
or
46A
.
related payment
: the making of a related payment has a meaning affected by sections
160APHN
and
160APHNA
.
secondary qualification period
, in relation to a taxpayer in relation to shares or an interest in shares, means:
(a) if the shares are not preference shares - the period beginning on the 45th day before, and ending on the 45th day after, the day on which the shares or interest became ex dividend ; or
(b) if the shares are preference shares - the period beginning on the 90th day before, and ending on the 90th day after, the day on which the shares or interest become ex dividend .
(a) the interest in a corporate limited partnership (within the meaning of Division 5A of Part III ) that a partner in the partnership has; and
(b) if a company does not have a share capital - the interest in the company that a member has.
substantially identical securities
has the meaning given by section
160APHF
.
wholly-owned group
: the question whether 2 or more companies are members of the same wholly-owned group is to be determined in the same way as under Subdivision
975-W
of the
Income Tax Assessment Act 1997
.
widely held trust
, at a particular time, means:
(a) a trust that, at that time, is neither a closely held fixed trust nor a non-fixed trust; or
(b) a trust the trustee of which is the subject of a declaration that is in force under regulations made for the purposes of paragraph 160APHR(1)(j) ; or
(c) a unit trust if, at that time:
(i) at least 75% of the units are held by a person who is, or persons each of whom is, a person referred to in any of paragraphs 160APHR(1)(a) to (j) or a prescribed person in relation to the trust; and
(ii) all of the units carry the same rights; and
(iii) if the units are redeemable, they are redeemable for a price determined on the basis of the trust's net asset value, according to Australian accounting principles; and
(iv) the trust engages only in qualifying activities within the meaning of subsection 160APHR(11) .
A share in respect of which a dividend is to be paid, or an interest (other than an interest as a beneficiary of a widely held trust) in such a share, becomes ex dividend on the day after the last day on which the acquisition by a person of the share will entitle the person to receive the dividend.
160APHE(2) [Interest as beneficiary]An interest as a beneficiary of a widely held trust in a share in respect of which a dividend is to be paid becomes ex dividend on the day after the last day on which the acquisition by a person of the interest will entitle the person to receive a distribution from the trust.
In this Division:
substantially identical securities
, in relation to shares, or in relation to an interest in shares, in a company (the
relevant company
), means property that is fungible with, or economically equivalent to, the shares or interest.
Subsections (3) and (4) do not limit, by implication, the meaning of subsection (1).
160APHF(3) Substantially identical securities in relation to shares.The following are taken to be substantially identical securities in relation to shares (the relevant shares ) in the relevant company:
(a) other shares in the relevant company that are of the same class as the relevant shares;
(b) other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;
(c) shares in another company that holds predominantly shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b);
(d) shares in another company that are, or other property that is, exchangeable at a fixed rate for the relevant shares or for shares in the relevant company of any of the kinds mentioned in paragraphs (a) and (b);
(e) a vested and indefeasible interest in a trust whose assets consist predominantly of shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b);
(f) an interest in a partnership whose assets consist predominantly of shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b). 160APHF(4) Substantially identical securities in relation to interests in shares.
The following interests are taken to be substantially identical securities in relation to an interest in shares (the relevant shares ) in the relevant company:
(a) a vested and indefeasible interest in a trust whose assets consist predominantly of:
(i) other shares in the relevant company that are of the same class as the relevant shares; or
(ii) other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;
(b) an interest in a partnership whose assets consist predominantly of:
(i) other shares in the relevant company that are of the same class as the relevant shares; or
(ii) other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;
(c) if the interest in the relevant shares is a unit in a unit trust - any other unit of the same class in the trust;
(d) if the interest in the relevant shares is a vested and indefeasible interest in the whole of a share in the relevant company - that share or any other share of the same class;
(e) if the interest in the relevant shares is a vested and indefeasible interest in part of a share in the relevant company - any other vested and indefeasible interest in a corresponding part of another share in the relevant company of the same class;
(f) if the interest in the relevant shares is exchangeable at a fixed rate for another interest in shares, or for shares, in the relevant company - the other interest or the shares, as the case may be. 160APHF(5) Commissioner may determine an interest in the corpus of a trust to be vested and indefeasible.
(a) a person has an interest in so much of the corpus of a trust as is comprised by shares or an interest in shares; and
(b) apart from this subsection, the interest in the trust would not be a vested or indefeasible interest; and
(c) the Commissioner considers that the interest in the trust should be treated as being vested and indefeasible, having regard to:
(i) the circumstances in which the interest is capable of not vesting or the defeasance can happen; and
(ii) the likelihood of the interest not vesting or the defeasance happening; and
(iii) the nature of the trust; and
(iv) any other matter the Commissioner thinks relevant;
the Commissioner may determine that the interest in the trust is to be taken to be vested and indefeasible.
160APHF(6) Effect of determination.A determination made under subsection (5) has effect according to its terms.
If a partnership acquires, holds, or disposes of, shares or an interest in shares, each partner in the partnership is taken to acquire, hold, or dispose of, as the case may be, an interest in the shares.
160APHG(2) Taxpayers becoming or ceasing to be partners.If the assets of a partnership include shares or an interest in shares:
(a) where a taxpayer becomes a partner in the partnership - the taxpayer is taken to acquire an interest in the shares; or
(b) where a taxpayer ceases to be a partner in the partnership - the taxpayer is taken to dispose of the taxpayer's interest in the shares. 160APHG(3) Trusts that are not widely held trusts.
If the trustee of a trust (other than a widely held trust) acquires, holds, or disposes of, shares or an interest in shares, each beneficiary of the trust (including, if the trust is a discretionary trust, a potential beneficiary) is taken to acquire, hold, or dispose of, as the case may be, an interest in the shares.
160APHG(4) Taxpayers becoming or ceasing to be beneficiaries of trusts that are not widely held trusts.If a trust estate (other than the trust estate of a widely held trust) includes shares or an interest in shares:
(a) where a taxpayer becomes a beneficiary (including, if the trust is a discretionary trust, a potential beneficiary) of the trust - the taxpayer is taken to acquire an interest in the shares; or
(b) where a taxpayer ceases to be a beneficiary (including, if the trust is a discretionary trust, a potential beneficiary) of the trust - the taxpayer is taken to dispose of the taxpayer's interest in the shares. 160APHG(5) Position of beneficiary of widely held trust if trustee makes the trustee's first acquisition of shares or interests.
(a) the trust estate of a widely held trust does not include shares or an interest in shares; and
(b) the trustee of the trust acquires shares or an interest in shares;
each beneficiary of the trust is taken to acquire an interest in the shares.
160APHG(6) Position of beneficiary of widely held trust if trust estate includes shares or interests.If the trust estate of a widely held trust has included, or includes, shares or interests in shares, each person who is a beneficiary of the trust holds an interest in the shares while the person is such a beneficiary.
160APHG(7) Disposal of shares or interests by trustee of widely held trust.If the trustee of a widely held trust disposes of some only of the shares or interests in shares that form part of the trust estate, no beneficiary of the trust is taken, because of the disposal, to dispose of that beneficiary's interest in the shares but, if the trustee disposes of all the shares and interests, each beneficiary is taken to dispose of the beneficiary's interest in the shares.
160APHG(8) Taxpayers becoming or ceasing to be beneficiaries of widely held trust.If the trust estate of a widely held trust has included or includes shares or an interest in shares:
(a) a taxpayer who becomes a beneficiary of the trust is taken to acquire an interest in the shares at the time when the taxpayer becomes the beneficiary, whether or not the trust estate includes the shares or interest in the shares at that time; and
(b) a taxpayer who is a beneficiary of the trust and acquires a further interest in the trust (whether by subscription for, or purchase of, further units or otherwise) is taken to acquire a further interest in the shares at the time when the taxpayer acquires the further interest in the trust, whether or not the trust estate includes the shares or interest in the shares at that time; and
(c) a taxpayer who disposes of an interest in the trust (whether by redemption or sale of units or otherwise) but remains a beneficiary of the trust is taken to dispose of an interest in the shares at the time when the taxpayer disposes of the interest in the trust, whether or not the trust estate includes the shares or interest in the shares at that time; and;
(d) a taxpayer who ceases to be a beneficiary of a trust is taken to dispose of the interest in shares that the taxpayer held as a beneficiary of the trust at the time when the taxpayer ceases to be a beneficiary of the trust, whether or not the trust estate includes the shares or interest in the shares at that time.
Note 1:
The interest that a partner in a partnership has in shares which, or an interest in which, is included in the assets of the partnership is worked out under section 160APHK .
Note 2:
The interest that a beneficiary of a trust has in shares which, or an interest in which, is held by the trustee of the trust is worked out under section 160APHL .
(a) a taxpayer acquires or disposes of shares, or an interest in shares, under a contract; and
(b) the price payable for the acquisition or disposal is fixed under the contract; and
(c) either of the following applies:
(i) the contract is unconditional;
(ii) the contract is subject to a condition being complied with before the contract takes effect and the condition has been complied with;
the taxpayer is taken, for the purposes of this Division, to have acquired or disposed of, as the case may be, the shares, or the interest, at the time of the making of the contract.
160APHH(2) Bonus shares.If shares (the bonus shares ) are issued to a taxpayer in respect of existing shares:
(a) if any part of the bonus shares is, or is taken to be, a dividend that is included in the taxpayer's assessable income - the bonus shares are taken for the purposes of this Division to have been acquired by the taxpayer at the time when they were issued; or
(b) otherwise - the bonus shares:
(i) are taken for the purposes of section 160APHR to have been acquired by the taxpayer at the time when they were issued; and
(ii) are taken for the purposes of the other provisions of this Division to have been acquired by the taxpayer at the time when the existing shares were acquired and to have been held by the taxpayer continuously from that time until they were issued.
In calculating the number of days for which the taxpayer is taken to have continuously held bonus shares as mentioned in subparagraph (b)(ii), any days before the bonus shares were issued in respect of which the taxpayer materially diminished risks of loss or opportunities for gain in respect of the existing shares are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer is taken to have held bonus shares.
160APHH(3) Shares or interest distributed in satisfaction of interest.(a) a taxpayer holds an interest in shares:
(i) under a trust; or
(ii) as a partner in a partnership; and
(b) the shares, or an interest in the shares, is distributed to the taxpayer in satisfaction of the interest referred to in paragraph (a);
the taxpayer is taken, for the purposes of this Division, to have held the shares or interest so distributed, to the extent to which the shares or interest distributed satisfies the interest referred to in paragraph (a), from the time when the taxpayer acquired the interest referred to in that paragraph.
In calculating the number of days for which the taxpayer is taken to have continuously held the shares or interest so distributed, any days in respect of which the trustee or partnership materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer is taken to have held the shares or interest.
160APHH(4) Shares or interest passing to executor or administrator.If any shares or interest in shares held by a person who has died has passed to the executor of the will, or the administrator of the estate, of the dead person, the executor or administrator is taken, for the purposes of this Division, to have acquired the shares at the time when they were acquired by the dead person.
In calculating the number of days for which the executor or administrator is taken to have continuously held the shares or interest, any days in respect of which the person materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the executor or administrator is taken to have held the shares or interest.
160APHH(5) Shares or interest held by person under a legal disability transferred to a trustee.(a) a person who holds shares or an interest in shares becomes subject to a legal disability; and
(b) the shares or interest is transferred to a trustee to be held in trust for the person while the person is under a legal disability;
both the person and the trustee are taken, for the purposes of this Division, to have held the shares or interest for the periods in which the shares or interest was held by either of them.
In calculating the number of days for which the trustee is taken to have continuously held the shares or interest, any days in respect of which the person materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the trustee is taken to have held the shares or interest.
160APHH(6) Shares held by a bare trustee for a sole beneficiary.(a) a person (the trustee ) holds shares in trust for another person (the beneficiary ); and
(b) the beneficiary:
(i) is the sole beneficiary of the trust; and
(ii) is absolutely entitled under the trust to the shares;
the following provisions have effect:
(c) this Division applies as if:
(i) the shares were held by the beneficiary and not by the trustee; and
(ii) the acts of the trustee in relation to the shares were acts of the beneficiary;
(d) if the shares were acquired by the trustee as a result of a disposal by the beneficiary, that acquisition and disposal are to be disregarded;
(e) if the shares are subsequently acquired by the beneficiary as a result of a disposal by the trustee, that acquisition and disposal are to be disregarded.
If paragraph (6)(b) ceases to apply to the beneficiary, then, after the time when it so ceases to apply (the relevant time ):
(a) if the trust has become a widely held trust:
(i) the shares are taken to have been disposed of by the beneficiary to the trustee at the relevant time; and
(ii) the beneficiary is taken to have acquired the beneficiary's interest in the shares immediately after the disposal; or
(b) in any other case - this Division applies to the beneficiary and the trustee as if subsection (6) had never applied;
and the respective positions of the beneficiary and the trustee in relation to the shares or interest are to be determined accordingly.
(a) a taxpayer holds, or holds an interest in, shares; and
(b) the taxpayer disposes of the shares or interest; and
(c) the taxpayer is, under subsection 26BC(4) , to be treated in the determination of the matters mentioned in paragraphs 26BC(4)(a) and (b) as if the transaction effecting the disposal had not been entered into;
the disposal is to be taken for the purposes of this Division not to have occurred.
160APHH(9) Change of trustees not to affect continuity of holding of shares or interests.Any person who was a trustee of a trust during part only of a continuous period in which shares or an interest in shares formed part of the trust estate is taken, for the purposes of this Division, to have held the shares or interest throughout that period.
160APHH(10) Certain disposals of shares or interests between companies in the same wholly-owned group not to affect continuity of holding.A company that is a member of a wholly-owned group is taken, for the purposes of this Division, to have held shares or an interest in shares throughout a continuous period if:
(a) the company held the shares or interest during part of the period; and
(b) during the remainder of the period the shares or interest was held by another company or other companies that were members of the same group.
In calculating the number of days in the continuous period during which the first-mentioned company is taken to have held the shares or interest, any days in the part of the period in which the shares or interest was held by a company that made an election in relation to the shares or interest under section 160APHR are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the first-mentioned company is taken to have held the shares or interest.
The effect of this section is that, in the calculation of the period for which a taxpayer is taken to have held shares or an interest in shares (the primary securities ) during a qualification period in relation to the taxpayer in relation to the primary securities:
(a) a disposal of the primary securities is taken in certain circumstances to be a disposal of certain other securities and not to be a disposal of the primary securities; and
(b) a disposal of certain other securities is taken in certain circumstances to be a disposal of the primary securities and not to be a disposal of the other securities. 160APHI(2) Meaning of related securities .
In this section:
(a) the primary securities; and
(b) any shares, or interests in shares, held by connected persons:
(i) that are substantially identical securities in relation to the primary securities; and
(ii) in respect of which a connected person has been paid, or is entitled to be paid, a franked dividend or a franked distribution or, in the case of a connected person that is a company, a rebateable dividend or a rebateable distribution, being in either case a dividend or distribution corresponding to the dividend or distribution paid on the primary securities;
but does not include shares or interests in shares:
(c) in relation to which an election is in force under section 160APHR ; and
(d) which were not acquired or disposed of for the purpose, or for purposes that included the purpose (whether or not the predominant purpose), of avoiding the application of this section. 160APHI(3) Meaning of connected persons .
The following persons are connected persons for the purposes of this section:
(a) the taxpayer;
(b) if, at a time during the qualification period, an associate of the taxpayer, under an arrangement to which they were parties, disposed of shares or an interest in shares - the associate;
(c) if the taxpayer is a company - another company that is in the same wholly-owned group. 160APHI(4) Related securities to be taken to be disposed of on a last-in first-out basis.
All related securities held by connected persons at a particular time constitute a group of securities for the purposes of this section and, subject to subsections (5), (6) and (7), any disposals of securities in the group that were effected by any connected persons during the qualification period are to be taken, in the order in which they occurred, as having been disposals on a last-in first-out basis, that is to say, as having been:
(a) first, disposals of the latest securities in the group to be acquired by any of the connected persons; and
(b) secondly, disposals of the next latest securities in the group to be so acquired, and so on. 160APHI(5) Subsection (4) not to apply to disposal between companies in the same wholly-owned group.
Subsection (4) does not apply in respect of the disposal of securities by a company in a wholly-owned group to another company in the same wholly-owned group.
160APHI(6) Time of acquisition of related securities held by company that is a member of wholly-owned group.If subsection 160APHH(10) applies to a company that is a member of a wholly-owned group in respect of any related securities in relation to a period, the securities are taken, for the purposes of subsection (4), to have been acquired at the beginning of the period.
160APHI(7) Subsection (4) not to apply if primary securities not held for requisite continuous period.If primary securities are disposed of during a qualification period and:
(a) if section 160APHO applies to the taxpayer in respect of the securities - the taxpayer has not satisfied subsection 160APHO(2) in relation to the qualification period; or
(b) if the primary securities are an interest in shares and section 160APHP applies to the taxpayer in respect of the interest - the taxpayer has not held the interest for the continuous period referred to in subsection 160APHP(1) ;
subsection (4) does not apply in respect of the disposal.
160APHI(8) Where value of securities actually disposed of is less than value of securities taken to be disposed of.If the value of any securities actually disposed of is less than the value of the securities that are taken to be disposed of, only such of the last-mentioned securities are taken to be disposed of as have a value equal to the value of the securities actually disposed of.
160APHI(9) Where value of securities actually disposed of exceeds value of securities taken to be disposed of.If the value of any securities actually disposed of exceeds the value of the securities that are taken to have been disposed of, such other related securities as have a value equal to the excess are taken to be disposed of in accordance with subsection (4).
160APHI(10) Where a disposal is taken to be a disposal of 2 or more parcels of securities.If, as a result of the application of subsection (4), a disposal of securities is taken to be a disposal of 2 or more parcels of related securities because those parcels of securities were acquired at the same time:
(a) the connected persons may agree as to the parcel of related securities that is to be taken to be disposed of; or
(b) if they are unable to agree, the Commissioner may determine the parcel of related securities that is taken to be disposed of. 160APHI(11) Where 2 or more disposals are taken to be disposals of the same securities.
If, as a result of the application of subsection (4), the disposals of 2 or more parcels of related securities would be taken to constitute a disposal of the same securities because those 2 parcels of related securities were disposed of at the same time:
(a) the connected persons may agree as to the related securities that are to be taken to be respectively disposed of by the disposals of the parcels of related securities; or
(b) if they are unable to agree, the Commissioner may determine the related securities that are to be taken to be respectively disposed of by the disposals of the parcels of related securities. 160APHI(12) Notional re-acquisition of securities that are taken to constitute a disposal of other securities.
If, as a result of this section, the primary securities are taken to have been disposed of by the taxpayer but are actually still held by the taxpayer, they are taken to have been re-acquired by the taxpayer immediately after the time when they are taken to be disposed of.
160APHI(13) Effect of agreement or determination.An agreement or determination made under subsection (10) or (11) has effect according to its terms.
The regulations may, either generally, or as otherwise provided in the regulations, prescribe:
(a) what is a position, a short position, a long position or a net position in relation to shares or an interest in shares; and
(b) when a position relates to particular shares or a particular interest in shares; and
(c) how the delta of a position is to be calculated;
and the following provisions of this section have effect subject to any such regulations.
160APHJ(2) Meaning of position .A position , in relation to shares or an interest in shares, is anything that has a delta in relation to the shares or interest, and includes, without limiting the generality of the above:
(a) a short sale, or a future sale, of:
(i) the shares or interest; or
(ii) property that is substantially similar to, or related to, the shares or interest; and
(b) a purchase, or a future purchase, of property that is substantially similar to, or related to, the shares or interest; and
(c) an option to buy or sell the shares or interest; and
(d) an option to buy or sell:
(i) property that is substantially similar to, or related to, the shares or interest; or
(ii) an interest in such property; and
(e) an option in relation to the shares or interest that is embedded in other property; and
(f) a non-recourse loan made to acquire the shares or interest; and
(g) an indemnity or guarantee in respect of the shares or interest.
However, if a share, or an interest in a share, is an employee share scheme security, a condition attached to the share or interest, or a term of the document that created the interest, that prevents the holder of the share or interest from disposing of it or could result in the share or interest being forfeited is not a position in relation to the share or interest.
160APHJ(3) Meaning of short position .A short position , in relation to shares or an interest in shares, is a position that has a negative delta in relation to the shares or interest. For example, a short sale, a sold future, a sold call option, a bought put option, and a sold share index future, are short positions.
160APHJ(4) Meaning of long position .A long position , in relation to shares or an interest in shares, is a position that has a positive delta in relation to the shares or interest. For example, a share purchase, a bought future, a bought call option, a sold put option, and a bought share index future, are long positions. To avoid doubt, shares or interests in shares are to be treated as a long position (with a delta of +1) in relation to themselves.
160APHJ(5) Meaning of net position .The net position of a taxpayer or fund in relation to shares, or in relation to an interest in shares, is calculated by adding the taxpayer's or fund's:
(a) long positions in the shares or interest (calculated on the basis of their deltas); and
(b) short positions in the shares or interest (calculated on the basis of their deltas).
For example, if a taxpayer sells 2 call options (each of which has a delta of -0.5) in respect of shares in a company and buys one share in the company (which has a delta of +1) in respect of those call options, the taxpayer has a net position of nil as a result of those transactions. In such a case, the taxpayer has materially diminished risks of loss and opportunities for gain in relation to the share.
160APHJ(6) Certain short positions in companies that deal in commodities to be disregarded.(a) a taxpayer holds shares, or an interest in shares, in a company; and
(b) the sole or dominant business of the company is producing, purchasing, consuming, trading in, or otherwise dealing in, any of the commodities mentioned in subsection (7); and
(c) the taxpayer is a controller of the company for the purposes of section 140-20 of the Income Tax Assessment Act 1997 ;
then, any of the taxpayer's short positions in the shares or interest that:
(d) relate to any of those commodities; and
(e) are taken in the ordinary course of the taxpayer's business;
are to be disregarded for the purposes of subsection (5).
160APHJ(7) Commodities to which subsection (6) applies.The commodities referred to in subsection (6) are as follows:
(a) minerals;
(b) gold;
(c) ores of a metal included in the table of metals in the former subsection 330-60(1) of the Income Tax Assessment Act 1997 .
(a) a taxpayer that is a life assurance company or a trustee of an eligible entity (within the meaning of Part IX) holds shares or an interest in shares; and
(b) the company, or the relevant fund or unit trust, has a short position arising from the obligations of the company or trustee to pass on to holders of policies issued by the company or to beneficiaries in the fund or trust the risks of loss and opportunities for gain in relation to the shares or interest; and
(c) the full value of any franking rebate in respect of the shares or interest is passed on to the holders of those policies or to those beneficiaries; and
(d) the obligations referred to in paragraph (b) do not directly or indirectly reduce the taxable income of the company, or of the fund or trust, or increase any loss (for the purposes of this Act) incurred by the company, or by the fund or trust;
the short position referred to in paragraph (b) is to be disregarded for the purposes of subsection (5) only in so far as the net position of the company, or of the fund or trust, is relevant to section 160AQT , 160AQYA or 160AQZA .
160APHJ(9) Short position of associate of taxpayer in shares or interest to be attributable to taxpayer.If, under an arrangement to which a taxpayer and an associate of the taxpayer are parties, the associate has a short position in shares, or in an interest in shares, held by the taxpayer, the associate's position is taken, for the purposes of subsection (5), to be a position that the taxpayer has.
160APHJ(10) Deltas of positions to be taken not to have changed in certain circumstances.(a) a taxpayer acquires shares or interests in shares; and
(b) on the day of the acquisition, or on a later day, the taxpayer enters into or has positions in relation to any of the shares or interests;
then, so long as the taxpayer continues to hold the shares or interests, continues to have those positions and does not enter into any further positions in relation to the shares or interests:
(c) in calculating the delta of a position held by the taxpayer in relation to the shares or interests:
(i) for the purposes of this Division other than paragraphs 106APHO(1)(b) and 160APHP(1)(b); or
those positions are taken to continue to have the deltas that they had on the later of the following days:
(ii) for the purposes of either of those paragraphs in its application to a related payment under an arrangement entered into before the commencement of this subsection, other than an arrangement that has been varied, renewed or replaced after that commencement;
(iii) the day on which the shares or interests were acquired;
(iv) a day on which any of the positions was entered into; or
(d) in calculating the delta of a position held by the taxpayer in relation to the shares or interests for the purposes of paragraph 160APHO(1)(b) or 160APHP (1)(b) in its application to a related payment under an arrangement:
(i) entered into after the commencement of this subsection (including an arrangement that renewed or replaced an arrangement entered into before that commencement); or
those positions are taken to continue to have the deltas that they had on the latest of the following days:
(ii) entered into before that commencement that was varied after that commencement;
(iii) the day on which the shares or interests were acquired by the taxpayer;
(iv) a day on which any of the positions that the taxpayer has in relation to the shares or interests was entered into;
160APHJ(11) [Effect]
(v) if the secondary qualification period in relation to the taxpayer in relation to the shares or interests is the second, or a subsequent, qualification period since the shares or interests were acquired by the taxpayer-the first day of the secondary qualification period.
This section has effect subject to sections 160APHK and 160APHL .
(a) the assets of a partnership include, or include an interest in, a share (the relevant share ); and
(b) an amount is included in the partnership's assessable income because of the partnership holding and the whole or a part of that amount (the dividend income ) is:
(i) a dividend; or
(ii) attributable, through one or more interposed trusts or partnerships, to a dividend; and
(c) there is a partnership amount in respect of the partnership in relation to a taxpayer who is a partner in the partnership, being a partnership amount that is wholly or partly attributable to the dividend income;
this section sets out how the taxpayer's interest in the relevant share is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the share.
Note:
The calculation is not required unless the partnership is a qualified person in relation to the dividend. If the partnership is not a qualified person, no partner in the partnership can receive a franking rebate or franking credit through the partnership.
160APHK(2) Partnership holding.For the purposes of this section, the partnership holding is the share, or the interest in the share, that is included in the assets of the partnership as mentioned in subsection (1).
160APHK(3) Calculation of interest.For the purposes of subsections 160APHG(1) and (2), the taxpayer's interest in the relevant share is the amount worked out by using the formula:
| Partnership holding × |
Partner's share of the dividend income
The dividend income |
where:
partner's share of the dividend income
means the partnership amount in relation to the partner to the extent to which that amount is attributable to the dividend income.
A position, or an appropriate part of a position, of the partnership in relation to the partnership holding is taken to be a position of a partner in a partnership if the position relates to the partner's interest in the relevant share.
160APHK(5) When a position of partnership relates to a partner.Without limiting by implication the circumstances in which a position of the partnership can be regarded as relating to the partner's interest in the relevant share, a position of the partnership relates to that interest if:
(a) the whole or a part of the profit or loss from the position will be distributed to, or deducted from an amount that would otherwise be distributed to, the partner; or
(b) the benefit or detriment of the position will otherwise be wholly or partly passed to the partner.
(a) the trustee of a trust other than a widely held trust holds, or holds an interest in, a share (the relevant share ); and
(b) an amount is included in the assessable income of the trust estate because of the trust holding and the whole or a part of that amount (the dividend income ) is:
(i) a dividend; or
(ii) attributable, through one or more interposed trusts or partnerships, to a dividend; and
(c) there is a trust amount in respect of the trust estate in relation to a taxpayer who is a beneficiary of the trust estate, being a trust amount that is wholly or partly attributable to the dividend income;
this section sets out how the taxpayer's interest in the relevant share is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the share.
Note:
The calculation is not required unless the trustee is a qualified person in relation to the dividend. If the trustee is not a qualified person, no beneficiary of the trust can receive a franking rebate or franking credit through the trust.
160APHL(2) Application in respect of widely held trust.(a) the trustee of a trust that is a widely held trust has held or holds, or has held or holds interests in, shares (the relevant shares ); and
(b) an amount is included in the assessable income of the trust estate because of the trust holding and the whole or a part of that amount (the dividend income ) is:
(i) a dividend; or
(ii) attributable, through one or more interposed trusts or partnerships, to a dividend; and
(c) there is a trust amount in respect of the trust estate in relation to a taxpayer who is a beneficiary of the trust estate, being a trust amount that is wholly or partly attributable to the dividend income;
this section sets out how the taxpayer's interest in the relevant shares is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the shares.
Note:
The calculation is not required unless the trustee is a qualified person in relation to the dividend. If the trustee is not a qualified person, no beneficiary of the trust can receive a franking rebate or franking credit through the trust.
160APHL(3) Trust holding in relation to trust other than a widely held trust.For the purposes of the application of this section in respect of a trust other than a widely held trust, the trust holding is the share, or the interest in a share, that is held by the trustee as mentioned in subsection (1).
160APHL(4) Trust holding in relation to a widely held trust.For the purposes of the application of this section in respect of a widely held trust, the trust holding is all the shares and interests in shares that the trustee has held or holds as mentioned in subsection (2).
160APHL(5) Calculation of interest under a trust other than a widely held trust.For the purposes of subsections 160APHG(3) and (4) in relation to a taxpayer referred to in subsection (1), the taxpayer's interest in the relevant share is the amount worked out by using the formula:
| Trust holding × |
Beneficiary's share of the dividend income
The dividend income |
where:
beneficiary's share of dividend income
means the trust amount in relation to the taxpayer to the extent to which that amount is attributable to the dividend income.
For the purposes of subsections 160APHG(5) to (8) in relation to a taxpayer referred to in subsection (2), the taxpayer's interest in the relevant shares is the amount worked out by using the formula:
| Trust holding × |
Beneficiary's share of the dividend income
The dividend income |
where:
beneficiary's share of dividend income
means the trust amount in relation to the taxpayer to the extent to which that amount is attributable to the dividend income.
The taxpayer's interest in the relevant share worked out under subsection (5), or the taxpayer's interest in the relevant shares worked out under subsection (6), is a long position with a delta of + 1 in relation to itself.
160APHL(8) Trust other than widely held trusts: when trustee's position attributed to taxpayer.If the trust is not a widely held trust, a position, or an appropriate part of a position, of the trustee in relation to the trust holding is taken to be a position of the taxpayer to the extent to which the position relates to the taxpayer's interest in the relevant share. However, if the trustee has a position in relation to 2 or more shares or interests in shares, the trustee's position is taken to constitute separate positions in relation to each of the shares or interests in accordance with an allocation made in a reasonable way.
160APHL(9) When a position of the trustee of a trust other than a widely held trust relates to the taxpayer's interest.Without limiting by implication the circumstances in which a position of the trustee of a trust other than a widely held trust will be taken to relate to the taxpayer's interest in a share or shares, a position of the trustee relates to that interest if:
(a) the position relates wholly or partly to shares in which the taxpayer has a vested and indefeasible interest; or
(b) the whole or a part of the profits or losses from the position will be distributed to, or deducted from an amount that would otherwise be distributed to, the taxpayer; or
(c) the benefit or detriment of the position will be wholly or partly passed to the taxpayer. 160APHL(10) Additional positions of the taxpayer.
(a) the trust is not a family trust within the meaning of Schedule 2F; and
(b) the trust is not a trust for the purposes of this Act merely because of the reference to executors and administrators in paragraph (a) of the definition of trustee in subsection 6(1) ; and
(c) the taxpayer's interest in the relevant share or the relevant shares is not an employee share scheme security;
the taxpayer has, in addition to any other long and short positions (including the positions that the taxpayer is taken to have under subsection (8)) in relation to the taxpayer's interest in the relevant share or relevant shares, a short position equal to the taxpayer's long position under subsection (7) and a long position equal to so much of the taxpayer's interest in the trust holding as is a fixed interest.
160APHL(11) A vested and indefeasible interest constitutes a fixed interest.For the purposes of subsection (10), the taxpayer's interest in the trust holding is a fixed interest to the extent that the interest is constituted by a vested and indefeasible interest in so much of the corpus of the trustas is comprised by the trust holding.
160APHL(12) Certain interests in trust holding taken to be defeasible.Subject to subsection (13), if the taxpayer has an interest in the trust holding and either:
(a) the interest may be redeemed under the terms of the trust for less than its value; or
(b) the value of the interest may be materially reduced by:
(i) if the trust is a unit trust - the issue of further units; or
(ii) otherwise - the creation of other interests under the trust;
the interest is taken to be defeasible.
160APHL(13) Case where interest not defeasible.(a) the trust is a unit trust and the taxpayer holds units in the unit trust; and
(b) the units are redeemable or further units are able to be issued; and
(c) where units in the unit trust are listed for quotation in the official list of an approved stock exchange (within the meaning of section 470 ) - the units held by the taxpayer will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and
(d) where the units are not listed as mentioned in paragraph (c) - the units held by the taxpayer will be redeemed, or any further units will be issued, for a price determined on the basis of the unit trust's net asset value, according to Australian accounting principles, at the time of the redemption or issue;
then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the taxpayer's interest, as a unit holder, in so much of the corpus of the trust as is comprised by the trust holding is defeasible.
160APHL(14) Commissioner may determine an interest to be vested and indefeasible.(a) the taxpayer has an interest in so much of the corpus of the trust as is comprised by the trust holding; and
(b) apart from this subsection, the interest would not be a vested or indefeasible interest; and
(c) the Commissioner considers that the interest should be treated as being vested and indefeasible, having regard to:
(i) the circumstances in which the interest is capable of not vesting or the defeasance can happen; and
(ii) the likelihood of the interest not vesting or the defeasance happening; and
(iii) the nature of the trust; and
(iv) any other matter the Commissioner thinks relevant;
the Commissioner may determine that the interest is to be taken to be vested and indefeasible.
160APHL(15) Effect of determination.A determination made under subsection (14) has effect according to its terms.
The regulations may prescribe the circumstances in which a taxpayer is taken to have materially diminished risks of loss or opportunities for gain in respect of shares or interests in shares, and the following provisions of this section have effect subject to any such regulations.
160APHM(2) Material diminution if net position has less than 30% of risks and opportunities.A taxpayer is taken to have materially diminished risks of loss or opportunities for gain on a particular day in respect of shares held by the taxpayer, or in respect of an interest held by the taxpayer in shares, if the taxpayer's net position on that day in relation to the shares or interest has less than 30% of those risks and opportunities.
160APHM(3) Net position worked out by reference to deltas.A taxpayer's net position is worked out using the financial concept known as delta (see section 160APHJ ). For example, an option to sell a share with a delta of minus 0.5 in relation to the share reduces the risks of loss and opportunities for gain by 50%.
This section gives examples of, but does not limit, what constitutes, for the purposes of this Division, the making of a related payment by a taxpayer or an associate of a taxpayer in respect of a dividend paid in respect of shares, or in respect of a distribution made in respect of interests in shares, held by the taxpayer.
160APHN(2) [Passing the benefit to a person]The taxpayer or associate is taken, for the purposes of this Division, to have made, to be under an obligation to make, or to be likely to make, a related payment in respect of the dividend or distribution if, under an arrangement, the taxpayer or associate has done, is under an obligation to do, or may reasonably be expected to do, as the case may be, anything having the effect of passing the benefit of the dividend or distribution to one or more other persons.
160APHN(3) [Acts that pass the benefit]Without limiting subsection (2), the doing of any of the following by the taxpayer or an associate of the taxpayer in the circumstances mentioned in subsection (4) may have the effect of passing the benefit of the dividend or distribution to one or more other persons:
(a) causing a payment or payments to be made to, or in accordance with the directions of, the other person or other persons; or
(b) causing an amount or amounts to be credited to, or applied for the benefit of, the other person or other persons; or
(c) causing services to be provided to, or in accordance with the directions of, the other person or other persons; or
(d) causing property to be transferred to, or in accordance with the directions of, the other person or other persons; or
(e) allowing any property or money to be used by the other person or other persons or by someone nominated by the other person or other persons; or
(f) causing an amount or amounts to be set off against, or to be otherwise applied in reduction of, a debt or debts owed by the other person or other persons to the taxpayer or associate; or
(g) agreeing to treat an amount or amounts owed to the other person or other persons by the taxpayer or associate as having been increased. 160APHN(4) [Circumstances]
The circumstances referred to in subsection (3), are where:
(a) the amount or the sum of the amounts paid, credited or applied; or
(b) the value or the sum of the values of the services provided, of the property transferred or of the use of the property or money; or
(c) the amount or the sum of the amounts of the set-offs, reductions or increases;
as the case may be:
(d) is, or may reasonably be expected to be, equal to; or
(e) approximates or may reasonably be expected to approximate; or
(f) is calculated by reference to;
the amount of the dividend or distribution.
160APHN(5) [Distribution by the trustees]The distribution by a trustee of a dividend to a beneficiary or beneficiaries of the trust who are presently entitled to it does not constitute the making of a related payment in respect of the dividend.
160APHN(6) [Fixing price or value etc]If an amount is taken into account in any way in favour of, or is notionally accredited to, a person in fixing a price or value, or in determining another amount, the first-mentioned amount is taken, for the purposes of this section, to be credited to the other person.
160APHN(7) [Effect]This section has effect subject to section 160APHNA .
If:
(a) a company (the relevant company ) is a member of a wholly-owned group; and
(b) all the shares in the relevant company are held by one or more other companies that are members of the group; and
(c) the company or companies holding those shares (each a seller ) enter into a contract or contracts to sell the shares to one or more persons (each a buyer ) who are not members of the group; and
(d) within 6 months after a contract is entered into as mentioned in paragraph (c) by a seller to a buyer to sell any of those shares, the relevant company pays a dividend in respect of the shares to the seller; and
(e) it is reasonable to assume that no substantial part of the dividend is attributable to profits of the relevant company before it became, or after it ceased to be, a member of the group; and
(f) the price paid for the sale of the shares was reduced by an amount representing the didvidend;
the reduction in price is taken not to be the making of a related payment in respect of the dividend.
A taxpayer who has held shares or an interest in shares on which a dividend has been paid is a qualified person in relation to the dividend if:
(a) where neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend - the taxpayer has satisfied subsection (2) in relation to the primary qualification period in relation to the dividend; or
(b) where the taxpayer or an associate of a taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend - the taxpayer has satisfied subsection (2) in relation to the secondary qualification period in relation to the dividend. 160APHO(2) [Qualification period]
A taxpayer who has held shares or an interest in shares on which a dividend has been paid satisfies this subsection in relation to a qualification period in relation to the shares or interest if, during the period:
(a) where the taxpayer held the shares - the taxpayer held the shares for a continuous period (not counting the day on which the taxpayer acquired the shares or, if the taxpayer has disposed of the shares, the day on which the disposal occurred) of not less than:
(i) if the shares are not preference shares - 45 days; or
(ii) if the shares are preference shares - 90 days; or
(b) where the taxpayer held the interest in the shares - the taxpayer held the interest for a continuous period (not counting the day on which the taxpayer acquired the interest or, if the taxpayer has disposed of the interest, the day on which the disposal occurred) of not less than:
(i) if the shares are not preference shares - 45 days; or
160APHO(3) [Calculating days shares or interest held]
(ii) if the shares are preference shares - 90 days.
In calculating the number of days for which the taxpayer continuously held the shares or interest, any days on which the taxpayer has materially diminished risks of loss or opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer held the shares or interest.
160APHO(4) [Beneficiary of widely held trust]This section does not apply to a taxpayer in respect of an interest in shares held by the taxpayer as a beneficiary of a widely held trust.
A taxpayer who as a beneficiary of a widely held trust has held an interest in shares contained in the trust holding (within the meaning of subsection 160APHL(4) ) of the widely held trust is aqualified person in relation to a dividend paid on any of the shares to which a distribution from the trust to the taxpayer is attributable if:
(a) where neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the distribution - during the primary qualification period in relation to the taxpayer in relation to the interest; or
(b) where the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the distribution - during the secondary qualification period in relation to the taxpayer in relation to the interest;
the taxpayer has held an interest in the shares contained in the trust holding as a beneficiary of the trust for a continuous period (not counting the day on which the taxpayer acquired the interest or, if the taxpayer has disposed of the interest, the day on which the disposal occurred) of not less than 45 days.
160APHP(2) [Calculating days interest held]In calculating the number of days for which the taxpayer continuously held the interest, any days on which the taxpayer has materially diminished risks of loss or opportunities for gain in respect of the interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer held the interest.
A taxpayer who has held shares, or an interest in shares, in a company on which a dividend is paid is a qualified person in relation to the dividend if:
(a) the shares were issued in connection with a proposed winding up of the company; and
(b) the shares or interest was not disposed of by the taxpayer before the commencement of the winding up; and
(c) neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend.
Subject to this section, a taxpayer referred to in any of the following paragraphs may elect to have Subdivision BA of Division 7 apply to the taxpayer, in respect of a year of income specified in the election (the specified year of income ) and all later years of income, in relation to shares, or an interest in shares, managed by or on behalf of the taxpayer as or in a discrete fund (the managed fund ):
(a) the trustee of a unit trust that, at the time when the election is made, is a listed widely held trust (as defined in section 272-115 in Schedule 2F to the Income Tax Assessment Act 1936 ;
(b) the trustee of a unit trust that, at the time when the election is made, is an unlisted very widely held trust (as defined in section 272-120 in Schedule 2F to the Income Tax Assessment Act 1936 ;
(c) a life assurance company within the meaning of section 110 ;
(d) a general insurance company (as defined in subsection 121AB(4) );
(e) a friendly society;
(f) an organisation referred to in subparagraph 23(eb)(i) that only carries on business as a registered health benefits organisation within the meaning of the National Health Act 1953 ;
(g) the trustee of a fund (other than an excluded fund) that is a complying superannuation fund for the purposes of Part IX in relation to the specified year of income;
(h) the trustee of a fund (other than an excluded fund) that is a complying ADF for the purposes of Part IX in relation to the specified year of income;
(i) the trustee of a unit trust that is a pooled superannuation trust for the purposes of Part IX in relation to the specified year of income;
(j) a taxpayer who is declared by the regulations to be a taxpayer, or is included in a class of taxpayers who are declared by the regulations to be taxpayers, to whom this section applies in relation to the specified year of income;
(k) the trustee of a unit trust if, at the time when the election is made:
(i) at least 75% of the units are held by a person who is, or persons each of whom is, a person referred to in a preceding paragraph or a prescribed person in relation to the trust; and
(ii) all of the units carry the same rights; and
(iii) if the units are redeemable, they are redeemable for a price determined on the basis of the trust's net asset value, according to Australian accounting principles; and
(iv) the trust engages only in qualifying activities.
[ CCH Note : Yields for the ASX All Ordinaries Index are set out on the ATO assist web site at www.ato.gov.au - under ``Business'', search for ``franking''.]
A taxpayer referred to in any of paragraphs (1)(a) to (i) and (k) cannot make an election under subsection (1) if, under the regulations, the taxpayer is precluded from making such an election.
160APHR(3) Election ineffective if related payments made.An election under subsection (1) does not have any effect in respect of a particular dividend or distribution if:
(a) the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend or distribution; and
(b) the payment was or will be a payment of a prescribed kind. 160APHR(4) Prescribed kinds of payments.
For the purposes of subsection (3), a payment is taken to have been, or will be, a payment of a prescribed kind if:
(a) unless the regulations otherwise provide, the payment occurred or will occur pursuant to:
(i) an obligation under a securities lending arrangement (other than such an obligation to which section 160AQUA applies); or
(ii) an obligation under an arrangement of a kind known as an equity swap; or
(b) the payment is included in a class of payments declared by the regulations to be payments to which subsection (3) applies. 160APHR(5) Consequences of ineffective elections.
If an election under subsection (1) does not have any effect in respect of a particular dividend or distribution because of subsection (3), neither the share nor the interest in respect of which the dividend or distribution was made, nor the positions that the taxpayer has in relation to the share or interest, are to be taken into account in calculating the net equity exposure that the managed fund has in shares, or interests in shares, included in the fund for the purposes of section 160AQZH .
160APHR(6) Commissioner's consent required for revocation of election.An election under subsection (1) is irrevocable without the consent of the Commissioner.
160APHR(7) Breach of condition of consent.(a) the Commissioner consents to the revocation of an election subject to specified conditions; and
(b) the election is revoked but any of the conditions is breached;
the revocation of the election is taken not to have been made.
160APHR(8) Taxpayer making election is a qualified person.A taxpayer who makes an election under subsection (1) is a qualified person in relation to every dividend paid during a year of income to which the election applies on shares to which the election applies which are held by the taxpayer or in which the taxpayer has an interest.
If the Commissioner has made a determination under subsection 177EA(5) in respect of:
(a) a dividend paid in respect of shares held by a taxpayer; or
(b) a distribution that:
(i) was derived from a dividend paid in respect of shares; and
(ii) is made in respect of an interest held by a taxpayer in the shares;
the following paragraphs have effect:
(c) if the shares or interest is included in a discrete fund to which an election under subsection (1) relates - the Commissioner may determine that the election ceases or ceased to have effect from the beginning of the year of income in which the determination was made or from the beginning of a later year of income specified in the determination;
(d) if the shares or interest is not included in such a fund - the taxpayer is not entitled, without the consent of the Commissioner, to make an election under subsection (1).
A determination under this subsection has effect according to its terms.
160APHR(10) Effect of entering into certain positions.(a) an election made by a taxpayer under subsection (1) is in force in respect of the shares or interests in shares included in a discrete fund managed by or on behalf of the taxpayer; and
(b) the Commissioner informs the taxpayer that the Commissioner is of the opinion that:
(i) the taxpayer has entered into, or caused another person (for example, the asset overlay manager of the fund) on behalf of the taxpayer, to enter into; or
a position or positions that, apart from this subsection, would not be taken into account under subsection 160AQZH(2) for a purpose of materially diminishing risks of loss and opportunities for gain in respect of the shares or interests;
(ii) under an arrangement to which the taxpayer and an associate are parties, the associate has entered into;
the following provisions have effect:
(c) the short position or positions are to be taken into account under subsection 160AQZH(2) ;
(d) the Commissioner may determine that the election ceases or ceased to have effect from a time specified in the determination;
(e) if such a determination is made:
(i) the determination has effect according to its terms; and
(ii) the taxpayer is not entitled to make another election under subsection (1) without the consent of the Commissioner; and
160APHR(11) Definitions.
(iii) if the Commissioner consents to the making of such an election subject to specified conditions and the election is made but any of the conditions is breached - the election is taken not to have been made.
In this section:
excluded fund
has the meaning given by subsection
10(1)
of the
Superannuation Industry Supervision Act 1993
.
qualifying activity
means an activity that:
(a) is an investment or business activity; and
(b) is conducted in accordance with the trust instrument or deed, and any prospectus, of the relevant trust; and
(c) is conducted at arm's length.
This section has effect for the purposes of subparagraph (c)(i) of the definition of widely held trust in section 160APHD and subparagraph 160APHR(1)(k)(i) .
160APHS(2) [Companies]A company is a prescribed person in relation to a unit trust if:
(a) the company is a non-resident; or
(b) were the company to receive a distribution from the trust, the distribution would be exempt income of the company for the purposes of this Part. 160APHS(3) [Trustees]
A trustee is a prescribed person in relation to a unit trust if:
(a) all the beneficiaries in the trust are prescribed persons under other provisions of this section; or
(b) were the trustee to receive a distribution from the trust, the distribution would be exempt income of the trust estate for the purposes of this Part. 160APHS(4) [Partnerships]
A partnership is a prescribed person in relation to a unit trust if:
(a) all the partners are prescribed persons under other provisions of this section; or
(b) were the partnership to receive a distribution from the trust, the distribution would be exempt income of the partnership for the purposes of this Part. 160APHS(5) [Individuals (not trustees)]
An individual (other than a trustee) is a prescribed person in relation to a unit trust if:
(a) he or she is a non-resident; or
(b) were he or she to receive a distribution from the trust, the distribution would be exempt income of the individual for the purposes of this Part. 160APHS(6) [Commonwealth, States etc]
The Commonwealth, each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island are prescribed persons in relation to a unit trust.
A taxpayer is a qualified person in relation to all dividends paid during a year of income on shares that the taxpayer held or held an interest in if:
(a) the taxpayer is an individual; and
(b) the total of the amounts of the rebates to which the taxpayer would be entitled under sections 160AQU , 160AQX and 160AQZ in respect of the year of income if the taxpayer were a qualified person in relation to each of those dividends does not exceed $5000. 160APHT(2) [Related payments]
A taxpayer is not a qualified person under subsection (1) in relation to a dividend if the taxpayer or an associate of the taxpayer:
(a) has made; or
(b) is under an obligation to make; or
(c) is likely to make;
a related payment in respect of the dividend or a distribution attributable to the dividend.
If a taxpayer that is a trustee or partnership is not a qualified person in relation to a dividend (including a trustee or partnership that is not a qualified person because of a previous application of this subsection), then, despite any other provision of this Subdivision (except subsection 160APHH(6) ), no beneficiary of the trust or partner in the partnership is a qualified person in relation to the dividend.
(a) a taxpayer that is a trustee or a partnership is not a qualified person in relation to a dividend; and
(b) the dividend is not paid to the trustee or partnership as the holder of the shares on which the dividend is paid (that is, the trustee or partnership receives a trust amount or partnership amount in respect of the dividend);
a deduction is allowable to the trustee or partnership, from the assessable income of the trust estate or partnership of the year of income in which the relevant trust amount or partnership amount was received, of an amount equal to the sum of the amounts represented by the letters PR and EPR in the definition of potential rebate amount in section 160APA in so far as it relates to the trust amount or partnership amount.
The class A franking surplus of a company at a particular time in a franking year is the amount by which the total of the class A franking credits of the company arising in the franking year and before that time exceeds the total of the class A franking debits of the company arising in the franking year and before that time.
The class B franking surplus of a company at a particular time in a franking year is the amount by which the total of the class B franking credits of the company arising in the franking year and before that time exceeds the total of the class B franking debits of the company arising in the franking year and before that time.
The class C franking surplus of a company at a particular time in a franking year is the amount by which the total of the class C franking credits of the company arising in the franking year and before that time exceeds the total of the class C franking debits of the company arising in the franking year and before that time.
The class A franking deficit of a company at a particular time in a franking year is the amount by which the total of the class A franking debits of the company arising in the franking year and before that time exceeds the total of the class A franking credits of the company arising in the franking year and before that time.
The class B franking deficit of a company at a particular time in a franking year is the amount by which the total of the class B franking debits of the company arising in the franking year and before that time exceeds the total of the class B franking credits of the company arising in the franking year and before that time.
The class C franking deficit of a company at a particular time in a franking year is the amount by which the total of the class C franking debits of the company arising in the franking year and before that time exceeds the total of the class C franking credits of the company arising in the franking year and before that time.
A franking credit of a company does not arise in relation to:
(a) the payment of a company tax instalment for a year of income; or
(aa) the making of an initial payment of tax that the company is required to make under section 221AP in respect of a year of income or the making of a further payment by the company on account of tax in respect of that year of income; or
(b) an assessment or amended assessment of company tax for a year of income; or
(c) a foreign tax credit allowable in respect of tax paid or payable by the company in respect of income derived in a year of income;
unless the company is sufficiently resident in the year of income.
A franking credit of a mutual life assurance company or SGIO does not arise after 21 August 1990.
(Repealed by No 89 of 2000)
Where a company has a class A franking surplus at the end of a franking year, there arises at the beginning of the next franking year a class A franking credit of the company equal to that class A franking surplus.
If a company has a class B franking surplus at the end of a franking year, there arises at the beginning of the next franking year a class B franking credit of the company equal to that class B franking surplus.
If a company has a class C franking surplus at the end of a franking year, there arises at the beginning of the next franking year a class C franking credit of the company equal to that class C franking surplus.
If, on a particular day, a company tax instalment payable under section 221AZK is paid in respect of a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1994-95 year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount paid;
(b) if the year of income is the 1995-96 year of income or a later year of income - a class C franking credit of the company equal to the adjusted amount in relation to the amount paid.
Note:
See section 160APME for franking credits for PAYG instalment payments.
If, on a particular day, an amount payable under subsection 221AZR(1) is paid in respect of a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1994-95 year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount paid;
(b) if the year of income is the 1995-96 year of income or a later year of income - a class C franking credit of the company equal to the adjusted amount in relation to the amount paid.
If a company receives a refund in relation to which a class A deficit deferral amount arises (see subsection 160AQJA(2) ) on a particular day, a class A franking credit of the company equal to the adjusted amount in relation to the class A deficit deferral tax payable in relation to the refund (see subsection 160AQJA(3) ) arises on that day.
160APMAB(2) Class B deficit deferral amount.If a company receives a refund in relation to which a class B deficit deferral amount arises (see subsection 160AQJB(2) ) on a particular day, a class B franking credit of the company equal to the adjusted amount in relation to the class B deficit deferral tax payable in relation to the refund (see subsection 160AQJB(3) ) arises on that day.
160APMAB(3) [Class C deficit deferral amount]If a company receives a refund, or a PAYG instalment variation credit arises, in relation to which a class C deficit deferral amount arises (see subsection 160AQJC(2) ) on a particular day, a class C franking credit of the company equal to the adjusted amount in relation to the class C deficit deferral tax payable in relation to the refund or PAYG instalment variation credit (see subsection 160AQJC(3) ) arises on that day.
Where, on a particular day (in this section called the ``payment day'' ) in a franking year (in this section called the ``payment year'' ), a payment is made by a company in respect of an initial payment of tax that the company is required to make under section 221AP in respect of a year of income:
(a) if the payment day is in the year of income - there arises on the first day of the franking year next following the payment year whichever of the following is applicable:
(i) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount paid;
(ii) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount paid; or
(b) in any other case - there arises on the payment day whichever of the following is applicable:
(i) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount paid;
(ii) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount paid.
If, after a company makes an initial payment of tax referred to in section 160APMA in respect of a year of income and before the day on which the company makes a final payment of tax in respect of that year of income under section 221AZD , the company makes a further payment on account of company tax in respect of that year of income, there arises, on the day on which that further payment is made, whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount of that further payment;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount of that further payment.
If, on a particular day, a company makes a final payment of tax in respect of a year of income under section 221AZD , there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount of that payment;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount of that payment.
If, on a particular day:
(a) a company makes a payment of, or on account of, company tax in respect of an eligible year of income; and
(b) that payment is not covered by section 160APM , 160APMAA , 160APMA , 160APMB or 160APMC ;
there arises, on the day on which that payment is made, whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount of that payment;
(d) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount of that payment;
(e) if the year of income is later than the 1994-95 year of income, but earlier than the 2000-01 year of income - a class C franking credit of the company equal to the adjusted amount in relation to the amount of that payment.
If, on a particular day, a company pays a PAYG instalment in respect of a year of income, there arises on that day a class C franking credit of the company.
160APME(2) [Amount]The class C franking credit is equal to the adjusted amount in relation to the amount of the instalment paid.
160APME(3) [No application if life assurance company]This section does not apply if the company is a life assurance company.
Note:
For the treatment of life assurance companies, see sections 160APVJ to 160APVL.
If, on a particular day, a PAYG instalment variation credit of a company is applied to reduce the company's liability for a PAYG instalment in respect of a year of income, there arises on that day a class C franking credit of the company.
The class C franking credit is equal to the adjusted amount in relation to the amount by which the company's liability for the PAYG instalment is reduced.
160APMF(3) [Life assurance company]This section does not apply if the company is a life assurance company.
Note:
For the treatment of life assurance companies, see sections 160APVJ to 160APVL.
If a company pays company tax in respect of a year of income on a particular day, there arises on that day a class C franking credit of the company.
160APMG(2) [Amount]The class C franking credit is equal to the adjusted amount in relation to the amount of the company tax paid.
160APMG(3) [Life assurance company]This section does not apply if the company is a life assurance company.
Note:
For the treatment of life assurance companies, see section 160APVM .
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
This section does not apply in relation to a class A franked dividend, a class B franked dividend or a class C franked dividend, paid to a shareholder by an exempting company. However, section 160APPA may apply in relation to such a dividend.
Subject to this section, where:
(a) on a particular day, a class A franked dividend is paid to a shareholder being a company; and
(b) the company is a resident at the time the dividend is paid;
there arises on that day a class A franking credit of the company equal to the class A franked amount of the dividend.
(a) on a particular day, a class B franked dividend is paid to a shareholder being a company; and
(b) the company is a resident at the time the dividend is paid;
there arises on that day a class B franking credit of the company equal to the class B franked amount of the dividend.
(a) on a particular day, a class C franked dividend is paid to a shareholder being a company; and
(b) the company is a resident at the time the dividend is paid;
there arises on that day a class C franking credit of the company equal to the class C franked amount of the dividend.
If a determination is made under paragraph 160AQCBA(3)(b) in respect of the dividend, no franking credit arises in respect of the dividend.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of the dividend, no franking credit arises in respect of the dividend.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of the dividend, the franking credit that would otherwise arise in respect of the dividend is reduced by the same proportion as that part of the dividend bears to the whole of the dividend.
No franking credit arises if the dividend is wholly exempt income of the shareholder.
If the dividend is partly exempt income of the shareholder, the franking credit arising under subsection (1), (1A) or (1B) shall be reduced by the amount calculated in accordance with the formula:
| FC × |
ED
TD |
where:
ED is the number of dollars in the part of the dividend that is exempt income;
FC is the amount of the franking credit determined under whichever of subsections (1), (1A) and (1B) is applicable; and
TD is the number of dollars in the total amount of the dividend.
In determining for the purposes of subsection (2) or (3) whether the dividend is wholly or partly exempt income of the shareholder, section 124ZM (which exempts dividends paid by PDFs) is to be disregarded.
(Omitted by No 216 of 1991)
(a) the dividend is paid to a shareholder that is a life assurance company; and
(b) the assets of the life assurance company from which the dividend was derived were included in the insurance funds of the life assurance company at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
(ii) ends at the time when the dividend was paid;
no franking credit arises under subsection (1), (1A) or (1B) in relation to the dividend unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.
No franking credit arises if the dividend was paid as part of a dividend stripping operation or if the shareholder is not a qualified person in relation to the dividend for the purposes of Division 1A.
Subject to this section, if, on a particular day, a class A franked dividend is paid by an exempting company (the first company ) to a shareholder being another exempting company (the second company ) and:
(a) the second company is a resident at the time the dividend is paid; and
(b) either of the following subparagraphs applies:
(i) the first company and the second company are members of the same effectively wholly-owned group of companies;
(ii) the second company holds more than 5% of the shares in the first company (other than finance shares or dividend access shares within the meaning of section 160APHBC or shares that do not carry the right to receive dividends) and it would be reasonable to conclude that the risks involved in, and the opportunities resulting from, holding those shares are substantially borne by, or substantially accrue to, the second company;
there arises on that day a class A franking credit of the second company equal to the class A franked amount of the dividend.
160APPA(2) [Class C franking credit arises]Subject to this section, if, on a particular day, a class C franked dividend is paid by an exempting company (the first company ) to a shareholder being another exempting company (the second company ) and:
(a) the second company is a resident at the time the dividend is paid; and
(b) either of the following subparagraphs applies:
(i) the first company and the second company are members of the same effectively wholly-owned group of companies;
(ii) the second company holds more than 5% of the shares in the first company (other than finance shares or dividend access shares within the meaning of section 160APHBC or shares that do not carry the right to receive dividends) and it would be reasonable to conclude that the risks involved in, and the opportunities resulting from, holding those shares are substantially borne by, or substantially accrue to, the second company;
there arises on that day a class C franking credit of the second company equal to the class C franked amount of the dividend.
160APPA(3) [Making reasonable conclusion]In deciding whether it would be reasonable to conclude as mentioned in subparagraph (1)(b)(ii) or (2)(b)(ii):
(a) regard is to be had to any arrangement in respect of shares (including unissued shares) in the first company (including any derivatives held or issued in connection with those shares); but
(b) no regard is to be had to risks involved in the ownership of shares in the first company that are substantially borne by any person in the person's capacity as a secured creditor. 160APPA(4) [Where dividend wholly exempt]
No franking credit arises if the dividend is wholly exempt income of the second company.
160APPA(5) [When no frankinsg credit]If a determination is made under paragraph 160AQCBA(3)(b) or 177EA (5)(b) in respect of the whole of the dividend, no franking credit arises in respect of the dividend.
160APPA(6) [Reduction of dividend]If a determination is made under paragraph 177EA(5)(b) in respect of a part of the dividend, the franking credit that would otherwise arise in respect of the dividend is reduced by the same proportion as that part of the dividend bears to the whole of the dividend.
160APPA(7) [Formula]If the dividend is partly exempt income of the second company, the franking credit arising under subsection (1) or (2) is reduced by the amount worked out by using the formula:
| Franking
credit |
× |
Exempt part of dividend
Dividend |
where:
dividend
means the number of dollars in the total amount of the dividend.
exempt part of dividend
means the number of dollars in the part of the dividend that is exempt income.
franking credit
means the franking credit determined under whichever of subsections (1) and (2) is applicable.
In determining for the purposes of subsection (3) or (7) whether the dividend is wholly or partly exempt income of the second company, section 124ZM (which exempts dividends paid by PDFs) is to be disregarded.
160APPA(9) [Assets to be held on behalf of life assurance company's shareholders](a) the second company is a life assurance company; and
(b) the assets of the life assurance company from which the dividend was derived were included in the insurance funds of the life assurance company at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
(ii) ends at the time when the dividend was paid;
no franking credit arises under subsection (1) or (2) in relation to the dividend unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.
No franking credit arises if the dividend was paid as part of a dividend stripping operation.
Subject to this section, where:
(a) a trust amount or partnership amount isincluded in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and
(b) there is a class A flow-on franking amount in relation to the trust amount or the partnership amount; and
(c) the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class A franking credit of the company equal to the amount calculated in accordance with the formula:
where:
CR is the applicable general company tax rate; and
PR is the class A potential rebate amount in relation to the trust amount or partnership amount.
(a) a trust amount or partnership amount is included in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and
(b) there is a class B flow-on franking amount in relation to the trust amount or the partnership amount;
there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class B franking credit of the company equal to the amount worked out using the formula:
where:
`` Potential rebate amount '' means the class B potential rebate amount in relation to the trust amount or partnership amount;
`` Company tax rate '' means the applicable general company tax rate.
(a) a trust amount or partnership amount is included in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and
(b) there is a class C flow-on franking amount in relation to the trust amount or the partnership amount; and
(c) the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class C franking credit of the company equal to the amount worked out using the formula:
where:
Potential rebate amount means the class C potential rebate amount in relation to the trust amount or partnership amount.
Company tax rate means the applicable general company tax rate.
(a) the company is a life assurance company; and
(b) the assets of the life assurance company to which the trust amount or partnership amount is attributable were included in the insurance funds of the life assurance company at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the franking credit would arise but for this subsection; and
(ii) ends at the time when the franking credit would arise but for this subsection;
no franking credit arises under subsection (1), (1A) or (2) in relation to the trust amount or partnership amount unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution represented by the trust amount or partnership amount, no franking credit arises under subsection (1), (1A) or (2) in respect of the dividend or distribution.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution represented by the trust amount or partnership amount, the franking credit that would otherwise arise under subsection (1), (1A) or (2) in respect of the dividend or distribution is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A franking credit of a company does not arise under this section if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as the payment of interest on a loan.
In subsection (6):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
If, on a particular day, a company makes a payment of an excess amount that:
(a) is covered by section 160AQR ; and
(b) relates to an offset to which the company is entitled;
there arises on that day whichever of the following is applicable:
(c) if the offset relates to company tax for the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount of the payment;
(d) if the offset relates to company tax for the 1993-94 year of income or the 1994-95 year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount of the payment;
(e) if the offset relates to company tax for the 1995-96 year of income or a later year of income - a class C franking credit of the company equal to the adjusted amount in relation to the amount of the payment.
If, on a particular day, a company makes a payment of an excess amount that:
(a) is covered by subsection 160AN(5) ; and
(b) relates to a foreign tax credit allowable in respect of tax paid or payable by the company in respect of income derived by the company in an eligible year of income;
there arises on that day whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company equal to the adjusted amount in relation to the amount of that payment;
(d) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking credit of the company equal to the adjusted amount in relation to the amount of that payment;
(e) if the year of income is the 1995-96 year of income or a later year of income - a class C franking credit of the company equal to the adjusted amount in relation to the amount of that payment.
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
On the day on which the termination time in relation to an estimated class A debit of a company occurs, there arises a class A franking credit of the company equal to the estimated class A debit.
On the day on which the termination time in relation to an estimated class B debit of a company occurs, there arises a class B franking credit of the company equal to the estimated class B debit.
On the day on which the termination time in relation to an estimated class C debit of a company occurs, there arises a class C franking credit of the company equal to the estimated class C debit.
Where, on a particular day, the Commissioner serves on a company a notice of an estimated class A debit determination that is in substitution for an earlier determination, there arises on that day a class A franking credit of the company equal to the amount of the class A franking debit that arose because of the earlier determination.
If, on a particular day, the Commissioner serves on a company a notice of an estimated class B debit determination that is in substitution for an earlier determination, there arises on that day a class B franking credit of the company equal to the amount of the class B franking debit that arose because of the earlier determination.
If, on a particular day, the Commissioner serves on a company a notice of an estimated class C debit determination that is in substitution for an earlier determination, there arises on that day a class C franking credit of the company equal to the amount of the class C franking debit that arose because of the earlier determination.
[ CCH Note: The heading to Subdiv BA, and s 160APVAA, were inserted immediately before Subdiv C, as specified by No 89 of 2000, s 3 and Sch 3 item 63.]
(a) on a particular day, a class B franking debit of a life assurance company arises under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the ``current year of income'' ); and
(b) a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;
then a class B franking credit of the company worked out under subsection (2) of this section arises on that day.
160APVA(1A) [Class C franking credit arises](a) on a particular day, a class C franking debit of a life assurance company arises under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the current year of income ); and
(b) a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;
then a class C franking credit of the company worked out under subsection (2) of this section arises on that day.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:
where:
`` Statutory factor '' means 1.0;
Note:
Statutory factor is used and modified in section 160AQCN .
`` Preceding year's company tax '' means the company tax assessed to the company for the year of income (the ``preceding year of income'' ) that immediately preceded the current year of income;
`` Standard component of preceding year's company tax '' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the standard component.
(a) on a particular day, a class B franking debit of a life assurance company arises:
(i) under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the ``current year of income'' ); or
(ii) under section 160APYA in relation to a refund received by the company, or an amount credited against a liability of the company, in respect of an instalment for a year of income (also the ``current year ofincome'' ); and
(b) either:
(i) before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or
(ii) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class B franking credit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.
160APVA(3A) [Further class C franking credit arises](a) on a particular day a class C franking debit of a life assurance company arises:
(i) under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the current year of income ); or
(ii) under section 160APYA in relation to a refund received by the company, or an amount credited against a liability of the company, in respect of an instalment for a year of income (also the current year of income ); and
(b) either:
(i) before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or
(ii) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company; and
(c) section 160AQCNCH (transitional provision for late balancing life assurance company for 1999-2000 year of income) does not apply to the class C franking debit;
then a class C franking credit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
``Statutory factor'' means 1.0;
Note:
Statutory factor is used and modified in section 160AQCN .
``Current year's company tax'' means the company tax assessed to the company for the current year of income;
``Standard component of current year's company tax'' means so much of the company tax assessed to the company for the current year of income as is attributable to the standard component.
(a) on a particular day, a class B franking debit of a life assurance company arises under subsection 160AQCCA(1) in relation to:
(i) an instalment that the company is required to pay under section 221AZK in respect of a year of income (the ``current year of income'' ); or
(ii) an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the ``current year of income'' ); and
(b) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class B franking credit of the company equal to the amount of the class B franking debit arises on the day on which the notice is served, or taken to be served.
160APVB(2) [Class C franking credit arises](a) on a particular day, a class C franking debit of a life assurance company arises under subsection 160AQCCA(1A) in relation to:
(i) an instalment that the company is required to pay under section 221AZK in respect of a year of income (the current year of income ); or
(ii) an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the current year of income ); and
(b) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class C franking credit of the company equal to the amount of the class C franking debit arises on the day on which the notice is served, or taken to be served.
This section does not apply to a franking debit if section 160AQCNCH (transitional provision for late balancing life assurance company for 1999-2000 year of income) applies to the franking debit.
If, on a particular day, a franking debit of a life assurance company arises under section 160APYBA in relation to the refund or application of an amount paid by the company in respect of a year of income, there arises on that day whichever of the following is applicable:
(a)
if the year of income is the 1992-93 year of income or an earlier year of income
-
a class A franking credit of the company worked out under subsection (2) of this section;
(b)
if the year of income is the 1993-94 year of income or the 1994-95 year of income
-
a class B franking credit of the company worked out under subsection (2) of this section;
(c)
if the year of income is the 1995-96 year of income or a later year of income
-
a class C franking credit of the company worked out under subsection (2) of this section.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
`` Refunded/applied amount '' means the amount refunded or applied;
`` Company tax '' means the company tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
If, on a particular day, a franking debit of a life assurance company arises under section 160APYBB in relation to the payment or application of a foreign tax credit in respect of tax paid or payable by a company in respect of a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking credit of the company worked out under subsection (2) of this section;
(c) if the year of income is the 1995-96 year of income or a later year of income - a class C franking credit of the company worked out under subsection (2) of this section.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
`` Foreign tax credit paid or applied '' means the amount paid or applied;
`` Standard component of foreign tax credit paid or applied '' means so much of the foreign tax credit paid or applied as is attributable to the standard component in relation to the year of income.
Where, on a particular day, a franking debit of a life assurance company arises under section 160APYB in relation to an amount received as a refund in relation to a year of income (in subsection (2) of this section called the ``current year of income'' ), there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company worked out under subsection (2) of this section.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking credit - 0.8; or
(b) in the case of a class B franking credit - 1.0;
`` Refunded amount '' means the amount received as a refund;
`` Preceding year's company tax '' means the company tax assessed to the company for the year of income (in this subsection called the ``preceding year of income'' ) that immediately preceded the current year of income;
`` Standard component of preceding year's company tax '' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the standard component.
(a) on a particular day, a franking debit of a life assurance company arises under section 160APYB in relation to an amount received as a refund in relation to a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking credit of the company worked out under subsection (4) of this section;
(d) if the year of income is the 1993-94 year of income or a later year of income - a class B franking credit of the company worked out under subsection (4) of this section.
The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking credit - 0.8; or
(b) in the case of a class B franking credit - 1.0;
`` Refunded amount '' means the amount received as a refund;
`` Company tax '' means the company tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
This section does not apply to a franking debit if section 160AQCNCH (transitional provision for late balancing life assurance company for 1999-2000 year of income) applies to the franking debit.
Where, on a particular day, a class A franking debit of a life assurance company arises under section 160APZ in relation to a reduction in the company tax of the company for a year of income, there arises on that day a class A franking credit of the company equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Overall reduction '' means the amount of the reduction;
`` Standard component of reduction '' means so much of the amount of the reduction as is attributable to the standard component.
If, on a particular day, a class B franking debit of a life assurance company arises under section 160APZ in relation to a reduction in the company tax of the company for a year of income, there arises on that day a class B franking credit of the company equal to the adjusted amount in relation to the amount worked out using the formula:
where:
`` Statutory factor '' means 1.0;
`` Overall reduction '' means the amount of the reduction;
`` Standard component of reduction '' means so much of the amount of the reduction as is attributable to the standard component.
If, on a particular day, a class C franking debit of a life assurance company arises under section 160APZ in relation to a reduction in the company tax of the company for a year of income, there arises on that day a class C franking credit of the company equal to the adjusted amount in relation to the amount worked out using the formula:
where:
Statutory factor means 1.0.
Overall reduction means the amount of the reduction.
Standard component of reduction means so much of the amount of the reduction as is attributable to the standard component.
(Repealed by No 216 of 1991)
(a) on a particular day, a class A franking debit of a life assurance company arises under subsection 160AQCD(1) in relation to an initial payment of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking credit of the company equal to the amount of the class A franking debit.
(a) on a particular day, a class B franking debit of a life assurance company arises under subsection 160AQCD(1) in relation to an initial payment of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class B franking credit of the company equal to the amount of the class B franking debit.
(a) on a particular day, a class A franking debit of a life assurance company arises under subsection 160AQCE(1) in relation to a further payment on account of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking credit of the company equal to the amount of the class A franking debit.
(a) on a particular day, a class B franking debit of a life assurance company arises under subsection 160AQCE(1) in relation to a further payment on account of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class B franking credit of the company equal to the amount of the class B franking debit.
If, on a particular day, a class B franking debit of a life assurance company arises under any of the following provisions:
(aa) subsection 160AQCCA(1) ;
(ab) subsection 160AQCCA(3) ;
(a) subsection 160AQCD(1) ;
(b) subsection 160AQCD(3) ;
(c) subsection 160AQCE(1) ;
(d) subsection 160AQCE(3) ;
(e) section 160AQCJ ;
(f) section 160AQCK ;
(g) section 160AQCL ;
there arises on that day a class A franking credit of the company equal to the amount that would have been the amount of that class B franking debit if the assumptions set out in subsection (2) were made.
The assumptions are as follows:
(a) the assumption that the class B franking debit had been calculated using a statutory factor of 0.2 instead of 1.0;
(b) the assumption that the class B franking debit had been calculated by reference to the special life company tax rate for the year of tax concerned instead of by reference to the general company tax rate for the year of tax concerned;
(c) the assumption that the reference to standard component in the provision concerned were a reference to general fund component.
(a) on a particular day, a class A franking debit of a company arises under subsection 160AQCN(1) because of paragraph (aa) or (c) of that subsection, or under subsection 160AQCN(2AA) because of paragraph (a) of that subsection, in relation to an amount received as a refund in relation to a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking credit of the company equal to the amount of the class A franking debit.
If, on a particular day, a class C franking debit of a life assurance company arises under any of the following provisions:
(a) subsection 160AQCCA(1A) ;
(b) subsection 160AQCCA(3A) ;
(c) section 160AQCK ;
(d) section 160AQCL ;
there arises on that day a class A franking credit of the company equal to the amount that would have been the amount of that class C franking debit if the assumptions set out in subsection (5) were made.
The assumptions are as follows:
(a) the assumption that the class C franking debit had been calculated using a statutory factor of 0.2 instead of 1.0;
(b) the assumption that the class C franking debit had been calculated by reference to the special life company tax rate for the year of tax concerned instead of by reference to the general company tax rate for the year of tax concerned;
(c) the assumption that the reference to standard component in the provision concerned were a reference to general fund component.
[ CCH Note: The heading to Subdiv BA, and s 160APVAA, were inserted immediately before Subdiv C, as specified by No 89 of 2000, s 3 and Sch 3 item 63.]
This Subdivision applies to a company tax instalment, company tax, refund or PAYG instalment variation credit in respect of the 2000-01 year of income or a later year of income.
(a) on a particular day:
(i) a life assurance company pays a PAYG instalment in respect of a year of income; or
(ii) a PAYG instalment variation credit of a life assurance company is applied to reduce the company's liability for a PAYG instalment in respect of a year of income; and
(b) the company's company tax in respect of that year of income has not been assessed on or before that day;
there arises on that day, a class C franking credit of the company equal to the adjusted amount in relation to the provisional franking component of the amount paid or applied.
The
provisional franking component
of the amount paid or applied is so much of the amount paid or applied as is attributable to income that the company estimates will be shareholders' funds income for that year of income.
Note 1:
At the time the life assurance company's company tax is assessed, the actual allocation of income to the relevant funds will be known. At that point, the franking credit that arises under this section is reversed by a franking debit under section 160AQCNCB and replaced with a franking credit under section 160APVK .
Note 2:
Section 160AQCNCC imposes a penalty for overestimating the tax paid that is attributable to income that is likely to be allocated to shareholders' funds.
(a) a class C franking credit of a life assurance company arises under section 160APVJ in relation to a payment of a PAYG instalment in respect of a year of income; and
(b) the company's company tax in respect of the year of income is assessed on a day (the assessment day ) that occurs on or after the day on which the class C franking credit arises; and
(c) section 160AQCNCG (transitional provision for early balancing life assurance company for 2000-01 year of income) does not apply to the class C franking credit;
there arises on the assessment day a class C franking credit of the company equal to the adjusted amount in relation to the final franking component of the amount paid or applied.
160APVK(2) [``final franking component'']The final franking component of the amount paid or applied is so much of the amount paid or applied as is attributable to shareholders' funds income for that year of income.
(a) on a particular day a life assurance company pays a PAYG instalment in respect of a year of income; and
(b) the company's company tax in respect of the year of income has been assessed before that day; and
(c) section 160AQCNCG (transitional provision for early balancing life assurance company for 2000-01 year of income) does not apply to the amount paid or applied;
there arises on that day, a class C franking credit of the company equal to the adjusted amount in relation to the franking component of the amount paid or applied.
160APVL(2) [``franking component'']The franking component of the amount paid or applied is so much of the amount paid or applied as is attributable to shareholders' funds income for that year of income.
(a) on a particular day, a life assurance company pays company tax in respect of a year of income; and
(b) section 160AQCNCG (transitional provision for early balancing life assurance company for 2000-01 year of income) does not apply to the payment;
there arises on that day a class C franking credit of the company equal to the adjusted amount in relation to the franking component of the amount paid.
160APVM(2) [``franking component'']The franking component of the amount paid is so much of the amount paid as is attributable to shareholders' funds income for that year of income.
If:
(a) a class C franking debit of a life assurance company arises under subsection 160AQCNCE(1) because a company becomes entitled to a PAYG instalment variation credit in respect of a year of income; and
(b) the company's company tax in respect of the year of income is assessed on a day (the assessment day ) that occurs on or after the day on which the class C franking debit arises;
there arises on the assessment day, a class C franking credit of the company equal to the amount of the class C franking debit.
If a class C franking credit of a life assurance company arises on a particular day under section 160APQB in respect of the 2000-01 year of income or a later year of income because of an amount paid by the company, there arises on that day:
(a) a class C franking debit of the company equal to the amount of that class C franking credit; and
(b) a class C franking credit of the company equal to the adjusted amount in relation to the franking component of the amount paid.
Paragraph (b) does not apply if section 160AQCNCG (transitional provision for early balancing life assurance company for 2000-01 year of income) applies to the class C franking credit.
160APVO(2) [``franking component'']The franking component of the amount paid is so much of the amount paid as is attributable to shareholders' funds income for that year of income.
There arises, on the day on which a PDF pays venture capital deficit tax for a franking year, a class C franking credit equal to the adjusted amount in relation to:
(a) the amount paid; or
(b) if the amount paid was calculated under subsection 5(2) of the Venture Capital Deficit Tax Act - the amount worked out using the formula:
| Amount paid × |
100
130 |
The credit under subsection (1) is reduced by the amount (if any) of the class C franking deficit at the end of the franking year.
[ CCH Note: The heading to Subdiv BA, and s 160APVAA, were inserted immediately before Subdiv C, as specified by No 89 of 2000, s 3 and Sch 3 item 63.]
This Subdivision applies to a company tax instalment, company tax or a refund in respect of a year of income that is no later than the 1999-2000 year of income.
A franking debit of a company does not arise in relation to:
(a) the payment of a company tax instalment for a year of income; or
(aa) the making of an initial payment of tax that the company is required to make under section 221AP in respect of a year of income or the making of a further payment by the company on account of tax in respect of that year of income; or
(b) an amended assessment of company tax for a year of income; or
(c) a foreign tax credit allowable in respect of tax paid or payable by the company in respect of income derived in a year of income;
unless the company is sufficiently resident in the year of income.
A franking debit of a mutual life assurance company or SGIO does not arise after 21 August 1990.
A franking debit of a registered organization does not arise after 3 p.m., by standard time in the Australian Capital Territory, on 20 August 1991.
(a) the class A required franking amount for a frankable dividend paid by a company on a particular day is not less than 10% of the amount of the dividend; and
(b) that class A required franking amount exceeds the class A franked amount of the dividend;
there arises on that day a class A franking debit of the company equal to the excess referred to in paragraph (b).
(a) the class B required franking amount for a frankable dividend paid by a company on a particular day is not less than 10% of the amount of the dividend; and
(b) that class B required franking amount exceeds the class B franked amount of the dividend;
there arises on that day a class B franking debit of the company equal to the excess referred in to paragraph (b).
(a) the class C required franking amount for a frankable dividend paid by a company on a particular day is not less than 10% of the amount of the dividend; and
(b) that class C required franking amount exceeds the class C franked amount of the dividend;
there arises on that day a class C franking debit of the company equal to the excess referred to in paragraph (b).
If the declaration made in relation to the dividend for the purposes of section 160AQF specifies a percentage for the purposes of subsection 160AQF(1A) , the dividend shall be taken for the purposes of subsection (1) of thissection to be a franked dividend to the extent of the percentage so specified.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan. 160APX(5) [Interpretation]
In subsection (4):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid:
a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters. SECTION 160APXA EXCESSIVE REDUCTION IN SECTION 160APX DEBIT 160APXA(1) [Determination by Commissioner of class A franking debit]
(a) a class A franking debit of a company that would have arisen under section 160APX has been reduced (including a reduction to nil) under subsection 160APX(2) because the company specified a percentage for the purposes of subsection 160AQF(1A) in relation to a year of income; and
(b) the total amount of the dividends taken into account in determining whether the company has made a sufficient distribution for the purposes of Division 7 of Part III in relation to that year of income exceeds the amount of the dividends required to be paid in order that the company be taken to have made a sufficient distribution;
the Commissioner may determine that a class A franking debit is to arise in relation to the company of such an amount as the Commissioner considers reasonable, not exceeding 120% of the amount of the reduction.
The class A franking debit of the company arises on the day on which the Commissioner serves on the company a notice specifying the amount of the debit.
If a company receives an amount as a refund under subsection 221AZL(2) or 221AZQ (1):
(a) if the refund is in respect of the 1994-95 year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount received arises on the day on which the company receives the amount; or
(b) if the refund is in respect of the 1995-96 year of income or a later year of income - a class C franking debit of the company equal to the adjusted amount in relation to the amount received arises on the day on which the company receives the amount.
If:
(a) a company makes a payment covered by section 160APM or 160APMAA in respect of a year of income; and
(b) either:
(i) the company receives an amount as a refund of that payment (not being a refund covered by section 160APY ); or
(ii) the Commissioner applies an amount, in respect of a credit under section 221AZM , against a liability of the company; and
(c) the amount refunded or credited, as the case may be, is not attributable to a reduction of company tax covered by section 160APZ ;
then:
(d) if the payment is in respect of the 1994-95 year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount received or credited arises on the day on which the company receives the refund or on the day on which that payment is credited; or
(e) if the payment is in respect of the 1995-96 year of income or a later year of income - a class C franking debit of the company equal to the adjusted amount in relation to the amount received or credited arises on the day on which the company receives the refund or on the day on which that payment is credited.
(Repealed by No 216 of 1991)
Where a company receives an amount as a refund under subsection 221AQ(3) , 221AR(6) , 221AU(4) , 221AV(4) , 221AW(5) or 221AX(14) , there arises, on the day on which the company receives the amount, whichever of the following is applicable:
(a) if the refund is in respect of the 1992-93 year of income or an earlier year of income - a class A franking debit of the company equal to the adjusted amount in relation to the amount received;
(b) if the refund is in respect of the 1993-94 year of income or a later year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount received.
If:
(a) a company makes a payment covered by section 160APMA , 160APMB , 160APMC or 160APMD ; and
(b) either:
(i) the company receives an amount as a refund of that payment (not being a refund covered by section 160APYB ); or
(ii) the Commissioner applies the payment against a liability of the company; and
(c) the amount refunded or applied, as the case may be, is not attributable to a reduction of company tax covered by section 160APZ ;
there arises, on the day on which the company receives the refund, or on the day on which that payment is applied, as the case may be, whichever of the following is applicable:
(d) if the payment mentioned in paragraph (a) is in respect of the 1992-93 year of income or an earlier year of income - a class A franking debit of the company equal to the adjusted amount in relation to the amount received or applied, as the case requires;
(e) if the payment mentioned in paragraph (a) is in respect of the 1993-94 year of income or the 1994-95 year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount received or applied, as the case requires;
(f) if the payment mentioned in paragraph (a) is in respect of the 1995-96 year of income or a later year of income - a class C franking debit of the company equal to the adjusted amount in relation to the amount received or applied, as the case requires.
(a) a class C franking credit of a company arises under section 160APME , 160APMF or 160APMG in respect of a PAYG instalment or company tax; and
(b) on a particular day, the company receives a refund of the PAYG instalment or the company tax; and
(c) the amount refunded is not attributable to a reduction of company tax covered by section 160APZ ;
a class C franking debit of the company arises on that day.
160APYBAA(2) [Amount]The class C franking debit is equal to the adjusted amount in relation to the amount of the refund.
160APYBAA(3) [Life assurance company]This section does not apply if the company is a life assurance company.
Note:
For the treatment of life assurance companies, see section 160AQCNCD .
If, on a particular day, a company claims a PAYG instalment variation credit in respect of a year of income under section 45-215 or 45-420 in Schedule 1 to the Taxation Administration Act 1953 , there arises on that day a class C franking debit of the company.
The class C franking debit is equal to the adjusted amount in relation to the amount of the PAYG instalment variation credit.
This section does not apply if the company is a life assurance company.
Note:
For the treatment of life assurance companies, see section 160AQCNCE .
If:
(a) a company receives a payment of a foreign tax credit under subsection 160AN(1) ; or
(b) a foreign tax credit to which a company is entitled is applied by the Commissioner under Division 3 of Part IIB of the Taxation Administration Act 1953 against a liability of the company other than:
(i) a liability for company tax in respect of an eligible year of income; or
(ii) a liability under Division 1B or 1C of Part VI; or
(iia) a liability for a PAYG instalment; or
(iii) a liability under subsection 160AN(5) ; or
(iv) a liability under section 160AQR ;
there arises, on the day on which the payment is made, or on the day on which that credit is applied, as the case may be, whichever of the following is applicable:
(c) if the foreign tax credit was allowable in respect of tax paid or payable by the company in respect of income derived in the 1992-93 year of income or an earlier year of income - a class A franking debit of the company equal to the adjusted amount in relation to the amount paid or applied, as the case requires;
(d) if the foreign tax credit was allowable in respect of tax paid or payable by the company in respect of income derived in the 1993-94 year of income or the 1994-95 year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount paid or applied, as the case requires;
(e) if the foreign tax credit was allowable in respect of tax paid or payable by the company in respect of income derived in the 1995-96 year of income or a later year of income - the class C franking debit of the company equal to the adjusted amount in relation to the amount paid or applied, as the case requires.
Where subsection 160AQJ(2) applies in relation to an initial payment of tax under section 221AP made by a company in respect of the 1993-94 year of income or a later year of income, there arises, on the day of that payment, a class B franking debit of the company equal to:
(a) if paragraph 160AQJ(2)(c) or (e) applies - the adjusted amount in relation to the amount of the relevant franking deficit tax referred to in that paragraph; or
(b) if paragraph 160AQJ(2)(d) applies - the adjusted amount in relation to so much of the amount of the relevant franking deficit tax referred to in that paragraph as is equal to the initial payment of tax; or
(c) if paragraph 160AQJ(2)(f) applies - the adjusted amount in relation to so much of the amount of the relevant franking deficit tax referred to in that paragraph as is equal to the amount calculated using the formula:
| Initial payment - Fund component |
where:
(i) the CS/RA component;
(ii) the AD/RLA component;
(iii) the NCS component.
Where:
(a) on a particular day, the Commissioner serves on a company a notice of an amended company tax assessment for an eligible year of income; and
(b) the amendment reduces the company tax of the company;
there arises on that day whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company equal to the adjusted amount in relation to the amount of the reduction;
(d) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking debit of the company equal to the adjusted amount in relation to the amount of the reduction;
(e) if the year of income is the 1995-96 year of income or a later year of income - a class C franking debit of the company equal to the adjusted amount in relation to the amount of the reduction.
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
Where, on a particular day, a company pays a class A franked dividend, there arises on that day a class A franking debit of the company equal to the class A franked amount of the dividend.
If, on a particular day, a company pays a class B franked dividend, there arises on that day a class B franking debit of the company equal to the class B franked amount of the dividend.
If, on a particular day, a company pays a class C franked dividend, there arises on that day a class C franking debit of the company equal to the class C franked amount of the dividend.
Where, on a particular day, the Commissioner serves on a company notice of an estimated class A debit determination, there arises on that day a class A franking debit of the company equal to the estimated class A debit specified in the notice.
If, on a particular day, the Commissioner serves on a company notice of an estimated class B debit determination, there arises on that day a class B franking debit of the company equal to the estimated class B debit specified in the notice.
If, on a particular day, the Commissioner serves on a company notice of an estimated class C debit determination, there arises on that day a class C franking debit of the company equal to the estimated class C debit specified in the notice.
(a) a class A franking credit of a life assurance company arose under section 160APP or 160APQ at a particular time during a year of income of the company; and
(b) after that time and during the year of income:
(i) if section 160APP applied - the asset of the company from which the dividend referred to in subsection (1) of that section was derived; or
becomes part of the insurance funds of the company;
(ii) if section 160APQ applied - the asset of the company to which the trust amount or partnership amount referred to in subsection (1) of that section is attributable;
there arises, on the day on which the asset becomes part of the insurance funds, a class A franking debit of the company equal to the class A franking credit.
(a) a class B franking credit of a life assurance company arose under section 160APP or 160APQ at a particular time during a year of income of the company; and
(b) after that time and during the year of income:
(i) if section 160APP applied - the asset of the company from which the dividend referred to in subsection (1A) of that section was derived; or
becomes part of the insurance funds of the company;
(ii) if section 160APQ applied - the asset of the company to which the trust amount or partnership amount referred to in subsection (1A) of that section is attributable;
there arises, on the day on which the asset becomes part of the insurance funds, a class B franking debit of the company equal to the class B franking credit.
(a) a class C franking credit of a life assurance company arises under section 160APP or 160APQ at a particular time (the crediting time ) during a year of income of the company; and
(b) at any time after the crediting time and during the year of income:
(i) if section 160APP applied - the asset of the company from which the dividend referred to in subsection (1B) of that section was derived; or
is both part of the insurance funds of the company and not held on behalf of the company's shareholders;
(ii) if section 160APQ applied - the asset of the company to which the trust amount or partnership amount referred to in subsection (2) of that section is attributable;
a class C franking debit of the company equal to the class C franking credit arises on the first day on which paragraph (b) applies to the asset.
(a) on a particular day after 30 June 1990, a company (in this subsection called the ``debit company'' ) pays an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this subsection called the ``scheme dividend'' ) to a shareholder in the debit company; and
(b) the scheme dividend was paid:
(i) under a dividend streaming arrangement in relation to the debit company; and
(ii) in substitution, in whole or in part, for the payment, or proposed payment, to the shareholder or to another shareholder, of one or more franked dividends (in this subsection called the ``substituted dividends'' ), being dividends whose actual or proposed franking percentage exceeds the franking percentage of the scheme dividend;
there arises on that day:
(c) a class A franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class A franking debit of the company arising under section 160AQB in respect of the payment of the scheme dividend:
| Scheme dividend × |
Substituted class A franking
percentage |
where:
(d) a class B franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class B franking debit of the company arising under section 160AQB in respect of the payment of the scheme dividend:
| Scheme dividend × |
Substituted class B franking
percentage |
where:
(e) a class C franking debit of the debit company equal to the amount worked out using the following formula, as reduced by the amount (if any) of the class C franking debit of the company arising under section 160AOB in respect of the payment of the scheme dividend:
| Scheme dividend × |
Substituted class C franking
percentage |
where:
(a) on a particular day after 30 June 1990, a company (in this subsection called the ``debit company'' ) issues one or more tax-exempt bonus shares (in this subsection called the ``scheme bonus shares'' ) to a shareholder in the debit company; and
(b) the scheme bonus shares were issued:
(i) under a dividend streaming arrangement in relation to the debit company; and
(ii) in substitution, in whole or in part, for the payment, or proposed payment, to the shareholder or to another shareholder, of one or more franked dividends (in this subsection called the ``substituted dividends'' );
there arises on that day:
(c) a class A franking debit of the debit company equal to the actual or proposed class A franked amount, or the sum of the actual or proposed class A franked amounts, of the substituted dividends; and
(d) a class B franking debit of the debit company equal to the actual or proposed class B franked amount, or the sum of the actual or proposed class B franked amounts, of the substituted dividends; and
(e) a class C franking debit of the debit company equal to the actual or proposed class C franked amount, or the sum of the actual or proposed class C franked amounts, of the substituted dividends.
(a) on a particular day after 30 June 1990, a company (in this subsection called the ``linked company'' ) pays an unfranked dividend or a partly franked dividend (which unfranked dividend or partly franked dividend is in this subsection called the ``linked dividend'' ) to a shareholder in the linked company; and
(b) the linked dividend was paid:
(i) under a dividend streaming arrangement in relation to another company (in this subsection called the ``debit company'' ); and
(ii) in substitution, in whole or in part, for the payment, or proposed payment, by the debit company of one or more franked dividends (in this subsection called the ``substituted dividends'' ) to a shareholder in the debit company;
there arises on that day:
(c) a class A franking debit of the debit company equal to the amount worked out using the following formula:
| Linked dividend × |
Substituted class A franking
percentage |
where:
(d) a class B franking debit of the debit company equal to the amount worked out using the following formula:
| Linked dividend × |
Substituted class B franking
percentage |
where:
(e) a class C franking debit of the debit company equal to the amount worked out using the formula:
| Linked dividend × |
Substituted class C franking
percentage |
where:
(a) a company (the debit company ) pays, on a particular day after 30 June 1990 and before the day on which the class C conversion time of the company occurs, one or more franked dividends (in this subsection called the ``scheme dividends'' ) to one or more shareholders in the debit company; and
(b) the scheme dividends were paid:
(i) under a dividend streaming arrangement in relation to the debit company; and
(ii) in substitution, in whole or in part, for the payment, or proposed payment, by another company of one or more unfranked dividends (in this subsection called the ``substituted dividends'' ) to one or more shareholders in that other company;
there arises on that day a class B franking debit of the debit company equal to the sum of the following amounts:
(c) to the extent that the substituted dividends comprise the whole or a part of a common issue of shares covered by paragraph (c) of the definition of ``dividend'' in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which that common issue relates;
(d) to the extent that the substituted dividends:
(i) do not consist of shares issued by the other company; and
the sum of the actual or proposed amounts of the dividends to which those distributions relate;
(ii) comprise the whole or a part of a common series of distributions covered by paragraph (a) of the definition of ``dividend'' in subsection 6(1) ;
(e) to the extent that paragraph (d) of this subsection does not apply and the substituted dividends comprise the whole or a part of a common series of credits covered by paragraph (b) of the definition of ``dividend'' in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which those credits relate.
(a) a company (the debit company ) pays, on a particular day on or after the day on which the class C conversion time of the company occurs, one or more franked dividends (the scheme dividends ) to one or more shareholders in the debit company; and
(b) the scheme dividends were paid:
(i) under a dividend streaming arrangement in relation to the debit company; and
(ii) in substitution, in whole or in part, for the payment, or proposed payment, by another company of one or more unfranked dividends (the substituted dividends ) to one or more shareholders in that other company;
there arises on that day a class C franking debit of the debit company equal to the sum of the following amounts:
(c) to the extent that the substituted dividends comprise the whole or a part of a common issue of shares covered by paragraph (c) of the definition of dividend in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which that common issue relates;
(d) to the extent that the substituted dividends:
(i) do not consist of shares issued by the other company; and
the sum of the actual or proposed amounts of the dividends to which those distributions relate;
(ii) comprise the whole or a part of a common series of distributions covered by paragraph (a) of the definition of dividend in subsection 6(1) ;
(e) to the extent that paragraph (d) of this subsection does not apply and the substituted dividends comprise the whole or a part of a common series of credits covered by paragraph (b) of the definition of dividend in subsection 6(1) - the sum of the actual or proposed amounts of the dividends to which those credits relate.
A reference in this section to a dividend streaming arrangement includes a reference to a dividend streaming arrangement entered into before the commencement of this section.
In this section, unless the contrary intention appears:
advantaged shareholders
has the meaning given by subsection (2).
franking credit benefit
has the meaning given by subsection (16).
giving a benefit to a shareholder
has a meaning affected by subsection (15).
greater benefit from franking credits
has a meaning affected by subsection (17).
This section applies in respect of a company that, whether in the same franking year or in different franking years, streams the payment of dividends, or the payment of dividends and the giving of other benefits, to its shareholders in such a way that:
(a) franking credit benefits are, or apart from this section would be, received by shareholders ( advantaged shareholders ) who would, in the year of income in which the dividends are paid, derive a greater benefit from franking credits than other shareholders; and
(b) the other shareholders ( disadvantaged shareholders ) will receive lesser franking credit benefits or will not receive any franking credit benefits, whether or not they receive any other benefits. 160AQCBA(2A) [Streaming of venture capital franking rebate]
This section applies to the streaming of venture capital franking rebate benefits as if:
(a) references to a franking debit include references to a venture capital debit; and
(b) references to the franked amount of the dividend include references to the venture capital franked amount of the dividend.
The Commissioner may make, in writing, either of the following determinations:
(a) a determination that a franking debit or an exempting debit of the company arises in respect of each dividend or other benefit paid or given to a disadvantaged shareholder;
(b) a determination that no franking credit benefit is to arise in respect of any dividend paid to an advantaged shareholder.
A determination does not form part of an assessment.
(a) a company pays non-share dividends in respect of non-share equity interests held by particular shareholders (the disadvantaged shareholders ); and
(b) the non-share dividends are not frankable dividends because of paragraph (ga) of the definition of frankable dividend in section 160APA ;
the Commissioner must not make a determination under subsection (3) in reliance on the fact that the disadvantaged shareholders do not obtain franking credit benefits in respect of the non-share dividends.
Subsection (3A) does not apply if the Commissioner is satisfied, having regard to all the relevant circumstances, that the company issued the non-share equity interests, or allowed them to remain on issue, for the purpose of ensuring that:
(a) the disadvantaged shareholders would receive no franking credit benefits; or
(b) other shareholders would receive franking credit benefits.
That purpose need not be the dominant purpose for issuing the interests or allowing them to remain on issue but must be more than a merely incidental purpose.
Without limiting subsection (3B), the following are relevant circumstances for the purposes of that subsection:
(a) the company's reason for issuing the non-share equity interests or allowing them to remain on issue;
(b) the commercial benefit the company obtained by issuing the non-share equity interests or allowing them to remain on issue;
(c) whether the company may pay franked dividends in respect of interests that are, from a commercial point of view, similar to the non-share equity interests.
If the Commissioner makes a determination under subsection (3), the Commissioner must:
(a) in respect of a determination made under paragraph (3)(a) - serve notice in writing of the determination on the company; or
(b) in respect of a determination made under paragraph (3)(b) - serve notice in writing of the determination on the advantaged shareholder.
The notice may be included in a notice of assessment.
160AQCBA(5) Publication in national newspaper of determination in relation to listed public company denying franking credit benefit.If the Commissioner makes a determination under paragraph (3)(b), in respect of a dividend paid by a listed public company within the meaning of the Income Tax Assessment Act 1997 , the Commissioner is taken to have served notice in writing of the determination on the advantaged shareholder if the Commissioner causes the notice to be published in a daily newspaper that circulates generally in each State, the Australian Capital Territory and the Northern Territory. The notice is taken to have been served on the day on which the publication takes place.
160AQCBA(6) Evidence of determination.(a) a notice of a determination; or
(b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination;
is conclusive evidence of:
(c) the due making of the determination; and
(d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct. 160AQCBA(7) Objections.
If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
160AQCBA(8) Effect of determination of franking debit or exempting debit.If the Commissioner makes a determination under paragraph (3)(a):
(a) on the day on which notice of the determination is served in writing on the company, a franking debit or exempting debit of the company arises in respect of the dividend or other benefit; and
(b) the amount of the franking debit or exempting debit is worked out in accordance with subsections (9) to (13).
In the case of a franking debit or exempting debit in respect of a partly franked or partly exempted dividend, the amount of the franking debit or exempting debit is the difference between the franked amount or the exempted amount and the amount that would have been the franked amount or exempted amount if the dividend had been franked to the maximum extent to which the dividends paid to the advantaged shareholders were franked.
In the case of a franking debit in respect of an unfranked dividend, the amount of the franking debit is the amount that would have been the franked amount if the dividend had been franked to the maximum extent to which the dividends paid to the advantaged shareholders were franked.
In the case of an exempting debit in respect of a dividend that has not been franked in accordance with section 160AQFA , the amount of the exempting debit is the amount that would have been the franked amount if the dividend had been franked to the maximum extent to which the dividends paid to the advantaged shareholders were franked.
In the case of a franking debit or exempting debit in respect of a benefit by way of the issue of bonus shares from a share premium account, the amount of the franking debit or exempting debit is the amount that, if the company had paid a dividend of an amount equal to the amount debited to the share premium account in respect of the bonus shares and had franked the dividend to the maximum extent to which the dividends paid to the advantaged shareholders were franked, would have been the franked amount of the dividend.
In the case of a franking debit or exempting debit in respect of any other benefit, the amount of the franking debit or exempting debit is the amount that, if the company had paid a dividend of an amount equal to the value of the benefit at the time when it was paid and had franked the dividend to the maximum extent to which the dividends paid to the advantaged shareholders were franked, would have been the franked amount of the dividend.
(a) a franking debit of the company arises under paragraph (8)(a) in respect of a dividend or other benefit; and
(b) a franking debit of the company arises under section 160AQCB in respect of the same dividend or other benefit;
the amount of the franking debit arising under paragraph (8)(a) is reduced by the amount of the franking debit arising under section 160AQCB .
160AQCBA(14) Effect of determination that no franking credit benefit is to arise.If the Commissioner makes a determination under paragraph (3)(b), the determination has effect according to its terms.
160AQCBA(15) Meaning of giving a benefit to a shareholder .A reference to giving a benefit to a shareholder in a company includes, but is not limited to, a reference to any of the following:
(a) the issue to the shareholder of bonus shares in the company;
(b) the return to the shareholder of paid-up share capital in the company;
(c) the forgiveness of a debt owed by the shareholder to the company;
(d) the making of a payment of any kind, or the giving of any property, to the shareholder or to another person on the shareholder's behalf, whether the payment is made or the property is given by the company or another person.
A shareholder receives a franking credit benefit if:
(a) the shareholder is a company and:
(i) a franking credit of the company arises under section 160APP or 160APPA ; or
(ii) the company is entitled to a rebate under section 46 or 46A in respect of a franked dividend or a part of a franked dividend and would not be so entitled if the dividend were an unfranked dividend; or
(b) the shareholder is a trustee or a partnership and an amount is included in the shareholder's assessable income because of the operation of section 160AQT; or
(c) the shareholder is entitled to a rebate of tax under section 160AQU , 160AQY or 160ASEP ; or
(d) the shareholder is not liable to pay tax under section 128B on a dividend or a part of a dividend because of the operation of paragraph 128B(3)(ga); or
(e) the shareholder is a company and an exempting credit of the company arises under section 160AQCNF .
The circumstances in which a shareholder would, in a year of income, derive a greater benefit from franking credits than another shareholder include, but are not limited to:
(a) any of the following circumstances existing in relation to the other shareholder and not in relation to the first shareholder:
(i) the shareholder is a non-resident;
(ii) the amount of tax (if any) that, apart from this Part, would be payable by the shareholder is less than the amount of the rebate of tax to which the shareholder would be entitled under section 160AQU , 160AQY or 160ASEP ;
(iii) the shareholder is a company that is unable to pay a dividend to its shareholders in the year of income because it has not made any profits or has not made sufficient profits to do so;
(iv) the shareholder is an exempting company or a company for which no franking credits arise; and
(b) any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder:
(i) a franking credit arises under section 160APPA ;
(ii) a franking credit or exempting credit arises under section 160AQCNF ;
(iii) subsection 160AQTA(2) or (5) applies;
(iv) section 160AQTB applies;
(c) if the relevant franking benefit is a franking rebate under section 160ASEP - the first shareholder qualifies for franking rebates under Subdivision G of Division 12A in relation to the year of income and the other shareholder does not.
There arises on the day of an on-market purchase by a company of a share a class A franking debit of the company equal to the amount (if any) calculated under subsection (2).
The amount is the amount that would be calculated under subsection 160AQDB(1) as the class A required franking amount for a dividend paid on that day to a shareholder in the company if that and any other on-market purchase by the company had been an off-market purchase.
There arises on the day of an on-market purchase by a company of a share a class B franking debit of the company equal to the amount calculated under subsection (4).
The amount is the amount that would be calculated under subsection 160AQDB(2) or 160AQDB (3) as the class B required franking amount for a dividend paid on that day to a shareholder in the company if that and any other on-market purchase by the company had been an off-market purchase.
There arises on the day of an on-market purchase by a company of a share a class C franking debit of the company equal to the amount calculated under subsection (6).
The amount is the amount that would be calculated under subsection 160AQDB(4) or 160AQDB (5) (whichever is applicable) as the class C required franking amount for a dividend paid on that day to a shareholder in the company if that and any other on-market purchase by the company had been an off-market purchase.
[ CCH Note: Note that there is a second Subdiv CA, comprising s 160AQCNCA to 160AQCNCE, that appears later in this Division.]
This Subdivision applies to a company tax instalment, company tax or a refund in respect of a year of income that is no later than the 1999-2000 year of income.
(a) on a particular day, a class B franking credit of a life assurance company arises:
(i) under section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (also the ``current year of income'' ); or
(ii) under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the ``current year of income'' ); and
(b) a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;
then a class B franking debit of the company worked out under subsection (2) of this section arises on that day.
160AQCCA(1A) [Class C franking debit arises](a) on a particular day, a class C franking credit of a life assurance company arises:
(i) under section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (the current year of income ); or
(ii) under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the current year of income ); and
(b) a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;
then a class C franking debit of the company worked out under subsection (2) of this section arises on that day.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:
where:
`` Statutory factor '' means 1.0;
Note:
Statutory factor is used and modified in section 160APVH .
`` Preceding year's company tax '' means the company tax assessed to the company for the year of income (the ``preceding year of income'' ) that immediately preceded the current year of income;
`` Standard component of preceding year's company tax' ' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the standard component.
(a) on a particular day, a class B franking credit of a life assurance company arises under:
(i) section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (the ``current year of income'' ); or
(ii) under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the ``current year of income'' ); and
(b) either:
(i) before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or
(ii) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class B franking debit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.
160AQCCA(3A) [Further class C franking debit](a) on a particular day, a class C franking credit of a life assurance company arises under:
(i) section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (the current year of income ); or
(ii) under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the current year of income ); and
(b) either:
(i) before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or
(ii) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company; and
(c) section 160AQCNCF (transitional provision for late balancing life assurance company for 1999-2000 year of income) does not apply to the class C franking credit;
then a class C franking debit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means 1.0;
Note:
Statutory factor is used and modified in section 160APVH .
`` Current year's company tax '' means the company tax assessed to the company for the current year of income;
`` Standard component of current year's company tax '' means so much of the company tax assessed to the company for the current year of income as is attributable to the standard component.
(a) on a particular day, a class B franking credit of a life assurance company arises under subsection 160APVA(1) in relation to a refund received by the company in respect of an instalment for a year of income (the ``current year of income'' ); and
(b) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class B franking debit of the company equal to the amount of the class B franking credit arises on the day on which the notice is served, or taken to be served.
160AQCCB(2) [Class C franking debit arises](a) on a particular day, a class C franking credit of a life assurance company arises under subsection 160APVA(1A) in relation to a refund received by the company in respect of an instalment for a year of income (the current year of income ); and
(b) on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;
then a class C franking debit of the company equal to the amount of the class C franking credit arises on the day on which the notice is served, or taken to be served.
Where, on a particular day, a franking credit of a life assurance company arises under section 160APMA in relation to an initial payment of tax that the company is required to make under section 221AP in respect of a year of income (in subsection (2) of this section called the ``current year of income'' ) there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking debit of the company worked out under subsection (2) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit - 1.0;
`` Initial payment '' means the initial payment of tax;
`` Preceding year's company tax '' means the company tax assessed to the company for the year of income (in this subsection called the ``preceding year of income'' ) that immediately preceded the current year of income;
`` Standard component of preceding year's company tax '' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the standard component.
(a) on a particular day, a franking credit of a life assurance company arises under section 160APMA in relation to an initial payment of tax that the company is required to make under section 221AP in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (4) of this section;
(d) if the year of income is the 1993-94 year of income or a later year of income - a class B franking debit of the company worked out under subsection (4) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit - 1.0;
`` Initial payment '' means the initial payment of tax;
`` Company tax '' means the company tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
Where, on a particular day, a franking credit of a life assurance company arises under section 160APMB in relation to a further payment on account of tax in respect of a year of income (in subsection (2) of this section called the ``current year of income'' ), there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking debit of the company worked out under subsection (2) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit - 1.0;
`` Further payment '' means the amount of the further payment;
`` Preceding year's company tax '' means the company tax assessed to the company for the year of income (in this subsection called the ``preceding year of income'' ) that immediately preceded the current year of income;
`` Standard component of preceding year's company tax '' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the standard component.
(a) on a particular day, a franking credit of a life assurance company arises under section 160APMB in relation to a further payment on account of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, whichever of the following is applicable:
(c) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (4) of this section;
(d) if the year of income is the 1993-94 year of income or a later year of income - a class B franking debit of the company worked out under subsection (4) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit - 1.0;
`` Further payment '' means the amount of the further payment;
`` Company tax '' means the company tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
(Repealed by No 216 of 1991)
If, on a particular day, a franking credit of a life assurance company arises under section 160APMC in relation to a final payment of tax in respect of a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or a later year of income - a class B franking debit of the company worked out under subsection (2) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit - 1.0;
`` Final payment '' means the amount of the final payment;
`` Company tax '' means the tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
This section does not apply to a franking credit if section 160AQCNCF (transitional provision for late balancing life assurance company for 1999-2000 year of income) applies to the franking credit.
If, on a particular day, a franking credit of a life assurance company arises under section 160APMD in relation to a payment of, or on account of, company tax in respect of a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking debit of the company worked out under subsection (2) of this section;
(c) if the year of income is the 1995-96 year of income or a later year of income - a class C franking debit of the company worked out under subsection (2) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit or a class C franking debit - 1.0;
`` Payment '' means the amount of the payment;
`` Company tax '' means the company tax assessed to the company for the year of income;
`` Standard component of company tax '' means so much of the company tax assessed to the company for the year of income as is attributable to the standard component.
This section does not apply to a franking credit if section 160AQCNCF (transitional provision for late balancing life assurance company for 1999-2000 year of income) applies to the franking credit.
If, on a particular day, a franking credit of a life assurance company arises under section 160APQB in relation to a payment of an excess amount in respect of a foreign tax credit allowable in relation to a year of income, there arises on that day whichever of the following is applicable:
(a) if the year of income is the 1992-93 year of income or an earlier year of income - a class A franking debit of the company worked out under subsection (2) of this section;
(b) if the year of income is the 1993-94 year of income or the 1994-95 year of income - a class B franking debit of the company worked out under subsection (2) of this section;
(c) if the year of income is the 1995-96 year of income or a later year of income - a class C franking debit of the company worked out under subsection (2) of this section.
The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
`` Statutory factor '' means:
(a) in the case of a class A franking debit - 0.8; or
(b) in the case of a class B franking debit or a class C franking debit - 1.0;
`` Excess amount '' means the amount of the excess;
`` Standard component of excess amount '' means so much of the excess amount as is attributable to the standard component in relation to the year of income.
(a) on a particular day, a class A franking credit of a life assurance company arises under subsection 160APVC(1) in relation to an amount received as a refund in relation to a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking debit of the company equal to the amount of the class A franking credit.
(a) on a particular day, a class B franking credit of a life assurance company arises under subsection 160APVC(1) in relation to an amount received as a refund in relation to a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class B franking debit of the company equal to the amount of the class B franking credit.
If, on a particular day, a class B franking credit of a company arises under any of the following provisions:
(aa) subsection 160APVA(1) ;
(ab) subsection 160APVA(3) ;
(a) section 160APVBA ;
(b) section 160APVBB ;
(c) subsection 160APVC(1) ;
(d) subsection 160APVC(3) ;
(e) subsection 160APVD(2) ;
there arises on that day a class A franking debit of the company equal to the amount that would have been the amount of that class B franking credit if the assumptions set out in subsection (2) were made.
The assumptions are as follows:
(a) the assumption that the class B franking credit had been calculated using a statutory factor of 0.2 instead of 1.0;
(b) the assumption that the class B franking credit had been calculated by reference to the special life company tax rate for the year of tax concerned instead of by reference to the general company tax rate for the year of tax concerned;
(c) the assumption that the reference to standard component in the provision concerned were a reference to general fund component.
If, on a particular day, a class C franking credit of a company arises under any of the following provisions:
(a) subsection 160APVA(1A) ;
(b) subsection 160APVA(3A) ;
(c) section 160APVBA ;
(d) section 160APVBB ;
(e) subsection 160APVD(3) ;
there arises on that day a class A franking debit of the company equal to the amount that would have been the amount of that class C franking credit if the assumptions set out in subsection (2AB) were made.
Paragraphs (2AA)(b), (c) and (e) do not apply to a franking credit if section 160AQCNCH (transitional provision for late balancing life assurance company for 1999-2000 year of income) applies to the franking credit.
The assumptions are as follows:
(a) the assumption that the class C franking credit had been calculated using a statutory factor of 0.2 instead of 1.0;
(b) the assumption that the class C franking credit had been calculated by reference to the special life company tax rate for the year of tax concerned instead of by reference to the general company tax rate for the year of tax concerned;
(c) the assumption that the reference to standard component in the provision concerned were a reference to general fund component.
(a) on a particular day, a class A franking credit of a company arises under subsection 160APVH(1) because of paragraph (aa) of that subsection, or under subsection 160APVH(4) because of paragraph (a) of that subsection, in relation to a company tax instalment in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or taken to be served, on the company;
then a class A franking debit of the company equal to the amount of the class A franking credit arises on the day on which the notice is served or taken to be served.
(a) on a particular day, a class A franking credit of a company arises under subsection 160APVH(1) because of paragraph (a) of that subsection in relation to an initial payment of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking debit of the company equal to the amount of the class A franking credit.
160AQCN(4) [Franking credit in relation to further payment of tax](a) on a particular day, a class A franking credit of a company arises under subsection 160APVH(1) because of paragraph (c) of that subsection in relation to a further payment on account of tax in respect of a year of income; and
(b) on or after that day, a notice of an original company tax assessment for the year of income is served, or deemed to be served, on the company;
there arises, on the day on which the notice is served or deemed to be served, a class A franking debit of the company equal to the amount of the class A franking credit.
(a) a company streams the payment of dividends, or the payment of dividends and the giving of other benefits, to its shareholders in a way mentioned in subsection 160AQCBA(2) ; and
(b) the Commissioner makes a determination under paragraph 160AQCBA(3)(a) in respect of a dividend paid or other benefit given by the company;
then, on the day on which notice of the determination is served in writing on the company, a franking debit or exempting debit of the company will arise in respect of the dividend or other benefit under paragraph 160AQCBA(8)(a) .
The amount of the franking debit or exempting debit is worked out as mentioned in paragraph 160AQCBA(8)(b).
(a) a company is a party to a scheme to which section 177EA applies; and
(b) the Commissioner makes a determination under paragraph 177EA(5)(a) in respect of a dividend paid by the company under the scheme;
a franking debit or exempting debit of the company will arise under paragraph 177EA(10)(a).
The amount of the franking debit or exempting debit is worked out under paragraph 177EA(10)(b).
If a private company is a life assurance company and is taken under Division
7A
of Part
III
to have paid a dividend at the end of the company's year of income, there arises on the last day of the year of income a class A franking debit of the company equal to the amount (if any) worked out under subsection (2).
Note:
Division 7A of Part III treats a private company as having paid a dividend if it pays or lends an amount to a shareholder or shareholder's associate, or forgives the debt of a shareholder or shareholder's associate.
160AQCNC(2) Amount of class A franking debit.The amount is the class A required franking amount worked out under subsection 160AQDB(1) for a dividend equalto the amount taken to have been paid as a dividend. (For this purpose, assume the dividend was paid on the last day of the company's year of income.)
160AQCNC(3) Creation of class C franking debit.If a private company is taken under Division 7A of Part III to have paid a dividend at the end of the company's year of income, there arises on the last day of the year of income a class C franking debit of the company equal to the amount (if any) worked out under subsection (4).
160AQCNC(4) Amount of class C franking debit.The amount is the class C required franking amount worked out under subsection 160AQDB(4) for a dividend equal to the amount taken to have been paid as a dividend. (For this purpose, assume the dividend was paid on the last day of the company's year of income.)
This Subdivision applies to a company tax instalment, company tax, refund or PAYG instalment variation credit in respect of the 2000-01 year of income or a later year of income.
If:
(a) a class C franking credit of a life assurance company arises under section 160APVJ because of:
(i) a payment by the company of an amount in respect of a PAYG instalment in respect of the year of income; or
(ii) the application of a PAYG instalment variation credit in respect of a PAYG instalment in respect of the year of income; and
(b) the company's company tax in respect of the year of income is assessed on a day (theassessment day ) that occurs on or after the day on which the class C franking credit arises;
there arises on the assessment day, a class C franking debit of the company equal to the amount of the class C franking credit.
A class C franking debit of a life assurance company arises under this subsection if:
(a) class C franking credits of the company (the provisional franking credits ) arise under subparagraph 160APVJ(1)(a)(i) in relation to the payment of PAYG instalments in respect of a year of income; and
(b) class C franking credits of the company (the final franking credits ) of the company arise under section 160APVK in relation to the payment of those PAYG instalments; and
(c) the sum of the provisional franking credits is more than 110% of the amount of the sum of the final franking credits.
The amount of the debit is equal to the difference between the sum of the provisional franking credits and the sum of the final franking credits.
160AQCNCC(2) [Debit equal to provisional franking credit]A class C franking debit of a life assurance company arises under this subsection if:
(a) class C franking credits of the company (the provisional franking credits ) arise under subparagraph 160APVJ(1)(a)(i) in relation to the payment of PAYG instalments in respect of a year of income; and
(b) when the company's company tax in respect of the year of income is assessed, no class C franking credits of the company arise under section 160APVK in relation to the payment of the PAYG instalments.
The amount of the debit is equal to the amount of the provisional franking credit.
160AQCNCC(3) [Year of income commencing before 1 July 2000]Subsections (1) and (2) do not apply to a company's 2000-01 year of income if it starts before 1 July 2000.
160AQCNCC(4) [Commissioner's discretion]The Commissioner may, in the Commissioner's discretion, determine that:
(a) the franking debit is not to arise under this section; or
(b) the amount of the franking debit that arises under this section is to be reduced to the amount specified in the determination. 160AQCNCC(5) [Powers]
For the purposes of the application of subsection 33(1) of the Acts Interpretation Act 1901 to the power to make a determination under subsection (4), nothing in this Act prevents the exercise of the power at a time before the franking debit arises.
(a) a class C franking credit of a company arises under section 160APVJ , 160APVK , 160APVL or 160APVM because of:
(i) a payment of a PAYG instalment in respect of a year of income; or
(ii) the application of a PAYG instalment variation credit to reduce the company's liability for a PAYG instalment in respect of a year of income; or
(iii) the payment by the company of an amount of company tax in respect of a year of income; and
(b) the company receives a refund of the amount paid or applied on a day (the refund day ) that occurs on or after the day on which the company's company tax in respect of that year of income is assessed; and
(c) the amount refunded or applied is not attributable to a reduction of company tax covered by subsection (3); and
(d) section 160AQCNCI (transitional provision for early balancing life assurance company for 2000-01 year of income) does not apply to the refund;
a class C franking debit of the company arises on the refund day.
The amount of the class C franking debit that arises under subsection (1) is equal to the adjusted amount in relation to so much of the amount refunded as represents a return to the company of an amount paid or applied to satisfy the company's liability to pay:
(a) a company tax instalment; or
(b) company tax;
in respect of shareholders' funds income for that year of income.
160AQCNCD(3) Amended assessment.If a class C franking debit of a life assurance company arises on a particular day under section 160APZ in relation to the 2000-01 year of income or a later year of income because of a reduction in the company's company tax, there arises on that day:
(a) a class C franking credit of the company equal to the amount of that class C franking debit; and
(b) a class C franking debit of the company equal to the adjusted amount in relation to so much of the reduction as represents a return to the company of an amount paid or applied to satisfy the company's liability to pay:
(i) a company tax instalment; or
in respect of shareholders' funds income for that yearof income.
(ii) company tax;
A class C franking debit does not arise under paragraph (b) if section 160AQCNCI (transitional provision for early balancing life assurance company for 2000-01 year of income) applies to the reduction.
(a) on a particular day, a life assurance company claims a PAYG instalment variation credit in respect of a year of income under section 45-215 or 45-420 in Schedule 1 to the Taxation Administration Act 1953 ; and
(b) the company's company tax in respect of that year of income has not been assessed on or before that day;
there arises on that day a class C franking debit of the company equal to the adjusted amount in relation to the provisional franking component of the PAYG instalment variation credit.
The provisional franking component of the PAYG instalment variation credit is so much of the credit as is referable to an amount paid or applied to the extent to which the amount paid or applied gave rise to franking credits of the company.
Franking debits and credits of a life assurance company arise under this section in relation to the 1999-2000 year of income if:
(a) the company's 1999-2000 year of income ends on or after 1 July 2000; and
(b) some of the company tax payable by the company in respect of that year of income is attributable to taxable income derived on or after 1 July 2000; and
(c) one of the items in the following table is satisfied:
| Circumstances in which this section applies | |||
| General description | This item is satisfied if ... | ||
| 1 | Assessment after section 160APM credit | (a) | a class C franking credit of the company arose under section 160APM because of an amount the company paid under section 221AZK in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income is assessed on a day (the adjustment day ) that occurs on or after the day on which the class C franking credit arose. | ||
| . | |||
| 2 | Section 160APM credit after assessment | (a) | on a particular day (the adjustment day ), a class C franking credit of the company arises under section 160APM because an amount the company pays under section 221AZK in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 3 | Assessment after section 160APMAA credit | (a) | a class C franking credit of the company arose under section 160APMAA because of an amount the company paid under subsection 221AZR(1) in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income is assessed on a day (the adjustment day ) that occurs on or after the day on which the class C franking credit arose. | ||
| . | |||
| 4 | Section 160APMAA credit after assessment | (a) | on a particular day (the adjustment day ), a class C franking credit of the company arises under section 160APMAA because of an amount the company pays under subsection 221AZR(1) in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 5 | Section 160APMD credit after assessment | (a) | on a particular day (the adjustment day ), a class C franking credit of the company arises under section 160APMD because of an amount of company tax the company pays in respect of a year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 6 | Substituted franking credit for payment of excess foreign tax credit | on a particular day (the adjustment day ), a class C franking credit of the company arises under section 160APQB in relation to the year of income because of an amount paid by the company. |
For the purposes of this section:
(a) the pre 1 July 2000 proportion is:
| Company tax for the 1999
-
2000 year of income that is
referable to taxable income derived before 1 July 2000 Company tax for the 1999 - 2000 year of income |
(b) the post 1 July 2000 proportion is:
| Company tax for the 1999
-
2000 year of income that is
referable to taxable income derived on or after 1 July 2000 Company tax for the 1999 - 2000 year of income |
(a) a class A franking credit of the company arises in relation to the pre 1 July 2000 proportion of the amount paid; and
(b) a class C franking debit of the company arises in relation to the pre 1 July 2000 proportion of the amount paid. 160AQCNCF(4) [Class A credit calculation]
The amount of the class A franking credit referred to in paragraph (3)(a) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
general component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the general component and referable to taxable income derived before 1 July 2000.
The amount of the class C franking debit referred to in paragraph (3)(b) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
standard component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the standard component and referable to taxable income derived before 1 July 2000.
On the adjustment day, there also arises:
(a) a class C franking debit of the company equal to the adjusted amount in relation to the post 1 July 2000 proportion of the amount paid; and
(b) a class C franking credit of the company equal to the adjusted amount in relation to the final franking component of the post 1 July 2000 proportion of the amount paid. 160AQCNCF(7) [Final franking component]
The final franking component of the post 1 July 2000 proportion of the amount paid is so much of that proportion of the amount paid as is attributable to shareholders' funds income for that year of income that is derived on or after 1 July 2000.
Franking credits of a life assurance company arise under this section in relation to the 2000-01 year of income if:
(a) the company's 2000-01 year of income starts before 1 July 2000; and
(b) some of the company tax payable by the company in respect of the 2000-01 year of income is referable to taxable income derived before 1 July 2000; and
(c) one of the items in the following table is satisfied:
| Circumstances in which this section applies | |||
| Item | General description | This item is satisfied if ... | |
| 1 | Assessment after payment of PAYG instalment, that gave rise to franking credits | (a) | a class C franking credit of the company arose under section 160APVJ because of a payment by the company of an amount in respect of a PAYG instalment in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income is assessed on a day (the adjustment day ) that occurs on or after the day on which the class C franking credit arose. | ||
| . | |||
| 2 | Payment of PAYG instalment after assessment | (a) | on a particular day (the adjustment day ), the company pays a PAYG instalment in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 3 | Company tax payment after assessment | (a) | on a particular day (the adjustment day ), the company pays an amount in respect of company tax that the company is liable to pay in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 4 | Substituted franking credit for payment of excess foreign tax credit | on a particular day (the adjustment day ), a class C franking credit of the company arises under section 160APQB in relation to the year of income because of an amount paid by the company. |
For the purposes of this section:
(a) the pre 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived before 1 July 2000 Company tax for 2000 - 01 year of income |
(b) the post 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived on or after 1 July 2000 Company tax for 2000 - 01 year of income |
(a) a class A franking credit of the company arises in relation to the pre 1 July 2000 proportion of the amount paid or applied; and
(b) a class C franking credit of the company arises in relation to the pre 1 July 2000 proportion of the amount paid or applied. 160AQCNCG(4) [Amount of Class A franking credit]
The amount of the class A franking credit referred to in paragraph (3)(a) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
general fund component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the general fund component and referable to taxable income derived before 1 July 2000.
The amount of the class C franking credit referred to in paragraph (3)(b) is equal to the adjusted amount in relation to the amount calculated using the formula:
| Amount paid × Pre 1 July 2000 proportion × |
Standard component of
companytax referable to pre 1 July 2000 income Company tax referable to pre 1 July 2000 income |
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
standard component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the standard component and referable to taxable income derived before 1 July 2000.
On the adjustment day, there also arises a class C franking credit of the company equal to the adjusted amount in relation to the final franking component ofthe post 1 July 2000 proportion of the amount paid.
160AQCNCG(7) [``Final franking component'']The final franking component of the post 1 July 2000 proportion of the amount paid is so much of that proportion of the amount as is attributable to shareholders' funds income for that year of income that is derived on or after 1 July 2000.
Franking debits and credits of a life assurance company arise under this section if:
(a) the company's 1999-2000 year of income ends on or after 1 July 2000; and
(b) some of the company tax payable by the company in respect of that year of income is referable to taxable income derived on or after 1 July 2000; and
(c) one of the items in the following table is satisfied:
| Circumstances in which this section applies | |||
| Item | General description | This item is satisfied if ... | |
| 1 | Assessment after refund | (a) | a class C franking debit of the company arose under section 160APY or 160APYA in relation to the refund of a company tax instalment in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income is assessed on a day (the adjustment day ) that occurs on or after the day on which the class C franking debit arose. | ||
| . | |||
| 2 | Refund after assessment | (a) | on a particular day (the adjustment day ) a class C franking debit of the company arises under section 160APY or 160APYA in relation to the refund of a company tax instalment in respect of the year of income; and |
| (b) | the company's company tax in respect of the year of income has been assessed before the adjustment day. | ||
| . | |||
| 3 | Amended assessment | on a particular day (the adjustment day ), a class C franking debit of the company arises under section 160APZ in relation to the amount of a reduction in the company's company tax. |
For the purposes of this section:
(a) the pre 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived before 1 July 2000 Company tax for 2000 - 01 year of income |
(b) the post 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived on or after 1 July 2000 Company tax for 2000 - 01 year of income |
(a) a class A franking debit of the company arises in relation to the pre 1 July 2000 proportion of the amount of the refund or reduction; and
(b) a class C franking credit of the company arises in relation to the pre 1 July 2000 proportion of the amount of the refund or reduction. 160AQCNCH(4) [Formula]
The amount of the class A franking debit referred to in paragraph (3)(a) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
general fund component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the general fund component and referable to taxable income derived before 1 July 2000.
The amount of the class C franking credit referred to in paragraph (3)(b) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
standard component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the standard component and referable to taxable income derived before 1 July 2000.
On the adjustment day, there also arises:
(a) a class C franking credit of the company equal to the adjusted amount in relation to the post 1 July 2000 proportion of the amount of the refund or reduction; and
(b) a class C franking debit of the company equal to the adjusted amount in relation to the franking component of the post 1 July 2000 proportion of the amount of the refund or reduction. 160AQCNCH(7) [``franking component'']
The franking component of the post 1 July 2000 proportion of the amount of the refund or reduction is so much of that proportion of that amount as is attributable to shareholders' funds income for that year of income that is derived on or after 1 July 2000.
Franking debits of a life assurance company arise under this section if:
(a) the company's 2000-01 year of income starts before 1 July 2000; and
(b) some of the income tax payable by the company in respect of the year of income is referable to taxable income derived before 1 July 2000; and
(c) one of the items in the following table is satisfied:
| Circumstances in which this section applies | ||
| Item | General description | This item is satisfied if ... |
| 1 | Refund after assessment | the company receives a refund of a PAYG instalment, or a refund of company tax, in respect of the year of income on a day (the adjustment day ) that occurs on or after the day on which the company's company tax in respect of that year of income is assessed. |
| . | ||
| 2 | Amended assessment | a class C franking debit of the company arises under section 160APZ in respect of the amount of a reduction in the company's company tax on a day (the adjustment day ) that occurs on or after the day on which the company's company tax in respect of that year of income is assessed. |
For the purposes of this section:
(a) the pre 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived before 1 July 2000 Company tax for 2000 - 01 year of income |
(b) the post 1 July 2000 proportion is:
| Company tax for 2000
-
01 year of income that is
referable to taxable income derived on or after 1 July 2000 Company tax for 2000 - 01 year of income |
(a) a class A franking debit of the company arises in relation to the pre 1 July 2000 proportion of the amount of the refund or reduction; and
(b) a class C franking debit of the company arises in relation to the pre 1 July 2000 proportion of the amount of the refund or reduction. 160AQCNCI(4) [Calculation of para (3)(a) amount]
The amount of the class A franking debit referred to in paragraph (3)(a) is equal to the adjusted amount in relation to the amount calculated using the formula:
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
general fund component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the general fund component and referable to taxable income derived before 1 July 2000.
The amount of the class C franking debit referred to in paragraph (3)(b) is equal to the adjusted amount in relation to the amount calculated using the formula:
| Amount of
refund or reduction |
× | Pre 1 July 2000
proportion |
× |
Standard component of
company tax referable to pre 1 July 2000 income Company tax referable to pre 1 July 2000 income |
where:
company tax referable to pre 1 July 2000 income
is the company tax assessed to the company in respect of the year of income to the extent to which it is referable to taxable income derived before 1 July 2000.
standard component of company tax referable to pre 1 July 2000 income
is so much of the company tax assessed to the company in respect of the year of income as is attributable to the standard component and referable to taxable income derived before 1 July 2000.
On the adjustment day, there also arises a class C franking debit of the company equal to the adjusted amount in relation to the franking component of the post 1 July 2000 proportion of the amount of the refund or reduction.
160AQCNCI(7) [``franking component'']The franking component of the post 1 July 2000 proportion of the amount of the refund or reduction is so much of that proportion of that amount as is attributable to shareholders' funds income for that year of income that is derived on or after 1 July 2000.
(a) a franking credit or debit of a life assurance company arises on the day on which the company's company tax in respect of the 2000-01 year of income is assessed; and
(b) the credit or debit arises in relation to an amount paid by the company, or the application of an amount of a PAYG instalment variation credit, in respect of a PAYG instalment; and
(c) the amount was paid or applied during the 2000-01 year of income; and
(d) the year of income starts before 1 July 2000;
the debit or credit is taken to have arisen on the last day of the 2000-01 year of income for the purposes of the deficit tax, deficit deferral tax and franking additional tax provisions.
The deficit tax, deficit deferral tax and franking additional tax provisions are:
(a) Subdivision B of Division 5 of this Part; and
(b) Subdivision BA of Division 5 of this Part; and
(c) sections 160ARX , 160ARYA and 160ARYL .
(a) at a particular time (the transition time ), all of the income of a company (the exempt company ) is wholly exempt from income tax; and
(b) at the transition time, another company (the former subsidiary ) ceases to be a subsidiary (as defined in section 57-125 of Schedule 2D) of the exempt company; and
(c) immediately before the transition time, the former subsidiary was not itself wholly exempt from income tax; and
(d) immediately before the transition time, all of the income of every company that beneficially owned shares in the former subsidiary was wholly exempt from income tax.
Note:
If the exempt company itself ceases to be wholly exempt from income tax, it and its subsidiaries will be covered by similar rules under Schedule 2D (treatment of tax exempt entities that become taxable).
160AQCNCK(2) Cancellation of surplus.Subject to subsection (4), if, immediately before the transition time, the former subsidiary has a class A franking surplus, a class B franking surplus or a class C franking surplus, then the surplus is reduced to nil at the transition time.
160AQCNCK(3) Cancellation of credit/debit.Subject to subsection (4), if:
(a) at any time after the transition time, there arises a franking credit or a franking debit of the former subsidiary; and
(b) the franking credit or franking debit is to any extent attributable to the period, or to an event taking place, before the transition time;
the franking credit or franking debit is to that extent taken not to have arisen.
160AQCNCK(4) Cases where subsections (2) and (3) do not apply.(a) one or more class A franking debits, class B franking debits or class C franking debits of the former subsidiary arise after the transition time; and
(b) any of the debits is to an extent (the amount of which is the pre-transition time component of the debit) attributable to the period, or to an event taking place, before the transition time; and
(c) immediately before the transition time:
(i) there was a class A franking surplus, class B franking surplus or class C franking surplus of the former subsidiary that was less than the total of the pre-transition time components of all of the debits of that class; or
(ii) there was no class A franking surplus, there was no class B franking surplus or there was no class C franking surplus of the former subsidiary;
then:
(d) in a case covered by subparagraph (c)(i) - subsection (2) does not apply to the surplus or surpluses concerned; and
(e) in any case - subsection (3) does not apply to the debits of the class or classes concerned. 160AQCNCK(5) States and Territories.
The reference in paragraph (1)(a) to a company all of whose income is wholly exempt from income tax includes a reference to a State or Territory.
The class A exempting surplus of a former exempting company at a particular time in a franking year is the amount by which the total of theclass A exempting credits of the company arising in the franking year and before that time exceeds the total of the class A exempting debits of the company arising in the franking year and before that time.
160AQCND(2) [Class C exempting surplus]The class C exempting surplus of a former exempting company at a particular time in a franking year is the amount by which the total of the class C exempting credits of the company arising in the franking year and before that time exceeds the total of the class C exempting debits of the company arising in the franking year and before that time.
160AQCND(3) [Class A exempting deficit]The class A exempting deficit of a former exempting company at a particular time in a franking year is the amount by which the total of the class A exempting debits of the company arising in the franking year and before that time exceeds the total of the class A exempting credits of the company arising in the franking year and before that time.
160AQCND(4) [Class C exempting deficit]The class C exempting deficit of a former exempting company at a particular time in a franking year is the amount by which the total of the class C exempting debits of the company arising in the franking year and before that time exceeds the total of the class C exempting credits of the company arising in the franking year and before that time.
If a former exempting company has a class A exempting surplus at the end of a franking year, there arises at the beginning of the next franking year a class A exempting credit of the company equal to that class A exempting surplus.
160AQCNDA(2) [Class C exempting surplus]If a former exempting company has a class C exempting surplus at the end of a franking year, there arises at the beginning of the next franking year a class C exempting credit of the company equal to that class C exempting surplus.
If, on a particular day, a former exempting company pays a class A exempted dividend, there arises on that day a class A exempting debit of the company equal to the amount that, except for subsection 160AQFA(4) , would be the class A exempted amount of the dividend.
160AQCNE(2) [Class C exempted dividend]If, on a particular day, a former exempting company pays a class C exempted dividend, there arises on that day a class C exempting debit of the company equal to the amount that, except for subsection 160AQFA(4) , would be the class C exempted amount of the dividend.
Subject to this section, if, on a particular day, a class A exempted dividend is paid to a former exempting company, or to an exempting company, that is a resident at the time the dividend is paid, there arises on that day a class A exempting credit of the former exempting company or a class A franking credit of the exempting company, as the case may be, equal to the class A exempted amount of the dividend.
160AQCNF(2) [Class C exempted dividend]Subject to this section, if, on a particular day, a class C exempted dividend is paid to a former exempting company, or to an exempting company, that is a resident at the time the dividend is paid, there arises on that day a class C exempting credit of the former exempting company or a class C franking credit of the exempting company, as the case may be, equal to the class C exempted amount of the dividend.
160AQCNF(3) [Where wholly exempt income]No exempting credit or franking credit arises if the dividend is wholly exempt income of the company.
160AQCNF(4) [Certain determinations]If a determination is made under paragraph 160AQCBA(3)(b) or 177EA (5)(b) in respect of the dividend, no exempting credit or franking credit arises in respect of the dividend.
160AQCNF(5) [Para 177EA(5)(b) determination]If a determination is made under paragraph 177EA(5)(b) in respect of a part of the dividend, the exempting credit or franking credit that would otherwise arise in respect of the dividend is reduced by the same proportion as that part of the dividend bears to the whole of the dividend.
160AQCNF(6) [Where dividend partly exempt]If the dividend is partly exempt income of the company, the exempting credit or franking credit arising under subsection (1) or (2) is reduced by the amount worked out by using the formula:
| Credit × |
Exempt part of dividend
Dividend |
where:
credit
means the exempting credit or franking credit, as the case may be, determined under whichever of subsections (1) and (2) is applicable.
dividend
means the number of dollars in the total amount of the dividend.
exempt part of dividend
means the number of dollars in the part of the dividend that is exempt income.
In determining for the purposes of subsection (3) or (6) whether the dividend is wholly or partly exempt income of the former exempting company or of the exempting company, section 124ZM (which exempts dividends paid by PDFs) is to be disregarded.
160AQCNF(8) [Life assurance companies]No franking credit arises under subsection (1) or (2) in relation to an exempted dividend if:
(a) the exempted dividend is paid to:
(i) a former exempting company; or
that is a life assurance company; and
(ii) an exempting company;
(b) the assets of the company from which the dividend was derived were included in the insurance funds of the company at any time during the period that:
(i) starts at the beginning of the year of income of the company in which the dividend was paid; and
(ii) ends at the time when the dividend was paid;
unless at all times when those assets were included in the insurance funds of the company during that period they were held on behalf of the company's shareholders.
No exempting credit or franking credit arises if the dividend was paid as part of a dividend stripping operation.
(a) an exempting company becomes a former exempting company; and
(b) at the time when it becomes a former exempting company it has a class A franking surplus;
then, subject to section 160AQCNI , immediately after it became a former exempting company:
(c) there arises a class A franking debit of the company equal to the surplus; and
(d) there arises a class A exempting credit of the company equal to the surplus. 160AQCNG(2) [Where class C franking surplus]
(a) an exempting company becomes a former exempting company; and
(b) at the time when it becomes a former exempting company it has a class C franking surplus;
then, subject to section 160AQCNI , immediately after it became a former exempting company:
(c) there arises a class C franking debit of the company equal to the surplus; and
(d) there arises a class C exempting credit of the company equal to the surplus. 160AQCNG(3) [Calculations]
For the purpose of calculating the franking debit referred to in paragraph (1)(c) or (2)(c) and the exempting credit referred to in paragraph (1)(d) or (2)(d), in relation to the company, the franking surplus referred to in paragraph (1)(b) or (2)(b) is taken:
(a) to be increased by so much of any franking credit of the company; and
(b) to be reduced by so much of any franking debit of the company;
that arose during the year of income in which the company became a former exempting company as is not attributable to a period in which, or to an event taking place at a time when, the company was an exempting company or would have been an exempting company if paragraph 160APHBA(a) had not been enacted.
160AQCNG(4) [Sec 160ASI class C franking credit]For the purposes of subsection (3), a class C franking credit that arose under section 160ASI is taken to be attributable to a period or time to the extent to which the class A franking credit or class B franking credit because of which the class C franking credit arose was attributable to that period or time.
(a) an exempting company becomes a former exempting company; and
(b) at the time when it becomes a former exempting company it has a class A franking deficit;
then, subject to section 160AQCNI , immediately after it became a former exempting company:
(c) there arises a class A franking credit of the company equal to the deficit; and
(d) there arises a class A exempting debit of the company equal to the deficit. 160AQCNH(2) [Where class C franking deficit]
(a) an exempting company becomes a former exempting company; and
(b) at the time when it becomes a former exempting company it has a class C franking deficit;
then, subject to section 160AQCNI , immediately after it became a former exempting company:
(c) there arises a class C franking credit of the company equal to the deficit; and
(d) there arises a class C exempting debit of the company equal to the deficit. 160AQCNH(3) [Calculation]
For the purpose of calculating the franking credit referred to in paragraph (1)(c) or (2)(c) and the exempting debit referred to in paragraph (1)(d) or (2)(d), in relation to the company, the franking deficit referred to in paragraph (1)(b) or (2)(b) is taken:
(a) to be reduced by so much of any franking credit of the company; and
(b) to be increased by so much of any franking debit of the company;
that arose during the year of income in which the company became a former exempting company as is not attributable to a period in which, or to an event taking place at a time when, the company was an exempting company or would have been an exempting company if paragraph 160APHBA(a) had not been enacted.
160AQCNH(4) [Sec 160ASI class C franking credit]For the purposes of subsection (3), a class C franking credit that arose under section 160ASI is taken to be attributable to a period or time to the extent to which the class A franking credit or class B franking credit because of which the class C franking credit arose was attributable to that period or time.
Subject to subsection (2), sections 160AQCNG , 160AQCNH , 160AQCNM and 160AQCNN do not apply to an exempting company that became a former exempting company as mentioned in the section concerned as a result of an acquisition of shares in the company under a contract that was entered into before 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
160AQCNI(2) Exception where contract made for purpose of obtaining franking credits.Subsection (1) does not apply if the contract was entered into for a purpose (whether or not the purpose was the dominant purpose but not including an incidental purpose) of obtaining a franking credit benefit within the meaning of subsection 177EA(18) .
160AQCNI(3) Former exempting company reverts to that status within 12 months after becoming an exempting company.(a) a former exempting company becomes an exempting company; and
(b) within a period of less than 12 months afterwards it again becomes a former exempting company;
whichever of the following subsections is applicable has effect.
160AQCNI(4) Exempting company has franking surplus.If, at the time when the company again became a former exempting company, it had a class A franking surplus or a class C franking surplus, the references in paragraphs 160AQCNG(1)(c) or (d) or (2)(c) or (d), as the case may be, to the surplus are taken to be references to only so much of the surplus as would have been the company's class A exempting surplus or class C exempting surplus, as the case may be, if the company had remained a former exempting company throughout that period.
160AQCNI(5) Exempting company has franking deficit.If, at the time when the company again became a former exempting company, it had a class A franking deficit or a class C franking deficit, the references in paragraphs 160AQCNH(1)(c) or (d) or (2)(c) or (d), as the case may be, to the deficit are taken to be references to only so much of the deficit as would have been the company's class A exempting deficit or class C exempting deficit, as the case may be, if the company had remained a former exempting company throughout that period.
If a former exempting company pays a frankable dividend in respect of which there is a class A required franking amount and:
(a) the reckoning day of the dividend is before the day on which the company became a former exempting company; or
(b) subsection 160AQE(3) or (4) applies in relation to the dividend;
then, subject to subsection (3), there arises a class A exempting debit of the company equal to the amount (if any) by which the class A required franking amount of the dividend exceeds the actual franked amount of the dividend.
160AQCNJ(2) [Class C required franking amount]If a former exempting company pays a frankable dividend in respect of which there is a class C required franking amount and:
(a) the reckoning day of the dividend is before the day on which the company became a former exempting company; or
(b) subsection 160AQE(3) or (4) applies in relation to the dividend;
then, subject to subsection (3), there arises a class C exempting debit of the company equal to the amount (if any) by which the class C required franking amount of the dividend exceeds the actual franked amount of the dividend.
160AQCNJ(3) [Debit amount reduced](a) a class A exempting debit, or a class C exempting debit, of a company arises under subsection (1) or (2) in respect of a dividend paid by the company; and
(b) a class A exempting debit, or a class C exempting debit, of the company arises under subsection 160AQCNE(1) or (2) in respect of the dividend;
the amount of the debit that, apart from this subsection, would arise under subsection (1) or (2) is reduced by the amount of the debit that arises under subsection 160AQCNE(1) or (2) .
160AQCNJ(4) [Dividend taken to be franked]When a class A exempting debit of a company arises, or, apart from subsection (3), would arise, under subsection (1), or a class C exempting debit of a company arises, or, apart from subsection (3), would arise, under subsection (2), in respect of the payment of a dividend, the dividend is taken for the purposes of section 160APX to have been class A franked or class C franked, as the case may be, to the extent of the amount worked out by using the formula:
| Dividend × Notional percentage |
For the purposes of subsection (4), the notional percentage is the percentage worked out by using the formula:
|
Franking debit
+
Exempting debit
Dividend |
× 100 |
In the formulas in subsections (4) and (5):
dividend
means the amount of the dividend.
exempting debit
means the amount of the class A exempting debit or class C exempting debit that, apart from subsection (3), would arise in respect of the dividend under subsection (1) or (2).
franking debit
means the amount (if any) of the class A franking debit or class C franking debit arising in respect of the dividend under section
160AQB
.
(a) a former exempting company becomes an exempting company; and
(b) at the time when it becomes an exempting company it has a class A exempting surplus;
then, immediately after it becomes an exempting company:
(c) there arises a class A exempting debit of the company equal to the surplus; and
(d) there arises a class A franking credit of the company equal to the surplus. 160AQCNK(2) [Class C exempting surplus]
(a) a former exempting company becomes an exempting company; and
(b) at the time when it becomes an exempting company it has a class C exempting surplus;
then, immediately after it becomes an exempting company:
(c) there arises a class C exempting debit of the company equal to the surplus; and
(d) there arises a class C franking credit of the company equal to the surplus.
(a) a former exempting company becomes an exempting company; and
(b) at the time when it becomes an exempting company it has a class A exempting deficit;
then, immediately after it becomes an exempting company:
(c) there arises a class A exempting credit of the company equal to the deficit; and
(d) there arises a class A franking debit of the company equal to the deficit. 160AQCNL(2) [Class C exempting deficit]
(a) a former exempting company becomes an exempting company; and
(b) at the time when it becomes an exempting company it has a class C exempting deficit;
then, immediately after it becomes an exempting company:
(c) there arises a class C exempting credit of the company equal to the deficit; and
(d) there arises a class C franking debit of the company equal to the deficit.
If, apart from this section, a franking credit of a former exempting company would have arisen under any of sections 160APM , 160APMAA , 160APMAB , 160APMD , 160APQA , 160APQB , 160APU to 160APVH and 160ASI, the following provisions of this section have effect.
160AQCNM(2) [Where credit taken not to arise]If the franking credit is wholly attributable to a period during which, or to an event taking place at a time when, the company was an exempting company:
(a) the franking credit is taken not to arise; and
(b) an exempting credit of the company equal to the amount of the franking credit is taken to arise. 160AQCNM(3) [Partly attributable]
If the franking credit is partly attributable to a period during which, or to an event taking place at a time when, the company was an exempting company:
(a) the franking credit is, to the extent to which it is so attributable, taken not to arise; and
(b) an exempting credit of the company equal to the amount of the franking credit, to the extent to which it is so attributable, is taken to arise. 160AQCNM(4) [Reference to periods]
A reference in subsection (2) or (3) to a period during which, or to a time when, a company was an exempting company includes a reference to a period during which, or to a time when, a company would have been an exempting company if paragraph 160APHBA(1)(a) had not been enacted.
160AQCNM(5) [Sec 160ASI class C franking credit]For the purposes of subsection (2) or (3), a class C franking credit that arises under section 160ASI is taken to be attributable to a period or time to the extent to which the class A franking credit or class B franking credit because of which the class C franking credit arose was attributable to that period or time.
If, apart from this section, a franking debit of a former exempting company would have arisen under section 160APY , 160APYA , 160APYBA , 160APYBB , 160APYC , 160APZ , 160AQC , 160AQCB , 160AQCBA , 160AQCCA to 160AQCN and 160ASI , the following provisions of this section have effect.
160AQCNN(2) [Wholly attributable]If the franking debit is wholly attributable to a period during which, or to an event taking place at a time when, the company was an exempting company:
(a) the franking debit is taken not to arise; and
(b) an exempting debit of the company equal to the amount of the franking debit is taken to arise. 160AQCNN(3) [Partly attributable]
If the franking debit is partly attributable to a period during which, or to an event taking place at a time when, the company was an exempting company:
(a) the franking debit is, to the extent to which it is so attributable, taken not to arise; and
(b) an exempting debit of the company equal to the amount of the franking debit, to the extent to which it is so attributable, is taken to arise. 160AQCNN(4) [Reference to periods]
A reference in subsection (2) or (3) to a period during which, or to a time when, a company was an exempting company includes a reference to a period during which, or to a time when, a company would have been an exempting company if paragraph 160APHBA(1)(a) had not been enacted.
160AQCNN(5) [Sec 160ASI class C franking debit]For the purposes of subsection (2) or (3), a class C franking debit that arises under section 160ASI is taken to be attributable to a period or time to the extent to which the class A franking debit or class B franking debit because of which the class C franking debit arose was attributable to that period or time.
If, apart from this subsection, a former exempting company would have a class A exempting deficit at the end of a franking year, then, immediately before the end of that franking year:
(a) there is taken to have arisen a class A exempting credit of the company equal to the deficit; and
(b) there is taken to have arisen a class A franking debit of the company equal to the deficit. 160AQCNO(2) [Class C exempting deficit]
If, apart from this subsection, a former exempting company would have a class C exempting deficit at the end of a franking year, then, immediately before the end of that franking year:
(a) there is taken to have arisen a class C exempting credit of the company equal to the deficit; and
(b) there is taken to have arisen a class C franking debit of the company equal to the deficit.
(a) at a particular time, whether before or after the commencement of this section, a company was or is an exempting company; and
(b) at that time all the shares in the company were or are owned by the Commonwealth; and
(c) the Commonwealth has offered for sale or sold, or proposes to offer for sale, some or all of the shares; and
(d) the Treasurer is satisfied, having regard to the matters mentioned in subsection (2), that it is desirable to make a declaration or declarations under this section in relation to the company. 160AQCNP(2) Matters to be taken into account.
The matters to which the Treasurer is to have regard under paragraph (1)(d) are:
(a) whether the making of the declaration or declarations is necessary to enable the company to pay fully franked dividends after the sale; and
(b) the extent to which the success of the sale or proposed sale depended or will depend upon the ability of the company to pay franked dividends; and
(c) the extent to which the reduction in receipts of income tax resulting from the making of the declaration or declarations would be offset by the receipt of increased proceeds from the sale; and
(d) any other matters that the Treasurer thinks relevant. 160AQCNP(3) When declarations may be made.
The following provisions of this section apply after the company became or becomes a former exempting company.
160AQCNP(4) Conversion of class A exempting surplus.If the former exempting company would, apart from this section, have a class A exempting surplus at the end of a franking year, the Treasurer may, in writing, declare that:
(a) a class A exempting debit of the company (not exceeding the class A exempting surplus) specified in the declaration is taken to have arisen immediately before the end of that franking year; and
(b) a class A franking credit of the company equal to the amount of the debit is taken to have arisen immediately before the end of that franking year. 160AQCNP(5) Conversion of class C exempting surplus.
If the former exempting company would, apart from this section, have a class C exempting surplus at the end of a franking year, the Treasurer may, in writing, declare that:
(a) a class C exempting debit of the company (not exceeding the class C exempting surplus) specified in the declaration is taken to have arisen immediately before the end of that franking year; and
(b) a class C franking credit of the company equal to the amount of the debit is taken to have arisen immediately before the end of that franking year. 160AQCNP(6) Declarations may be conditional.
A declaration may be expressed to be subject to compliance by the former exempting company with such conditions as are specified in the declaration.
160AQCNP(7) Effect of breach of condition.If a condition specified in a declaration is not complied with, the Treasurer may revoke the declaration and, if he or she thinks appropriate, make a further declaration under subsection (4) or (5), as the case requires.
160AQCNP(8) Effect of declaration.A declaration, unless it is revoked, has effect according to its terms.
(a) a company is a party to a scheme to which section 45B applies; and
(b) the Commissioner makes a determination under subsection 45C(3) in respect of the whole or a part of a capital benefit provided by the company under the scheme;
a franking debit of the company will arise under section 45C .
160AQCNQ(2) [Calculating franking debit]The amount of the franking debit is worked out under paragraph 45C(3)(b) and subsection 45C(5) .
Franking debits also arise under sections 160ARDQ , 160ARDS , 160ARDV and 160ARDX .
(a) has taken liability reduction action; or
(b) has paid an initial payment of tax under section 221AP ; or
(ba) has paid a company tax instalment;
the company may lodge an application with the Commissioner for:
(c) the determination of an estimated class A debit in relation to the liability reduction action or in relation to the payment of the initial payment of tax or the company tax instalment; or
(d) the determination of such an estimated class A debit in substitution for an earlier determination.
An estimated class A debit in relation to an initial payment of tax must relate to the refund of that payment under subsection 221AQ(3) , 221AR(6) or 221AU(4) .
An estimated class A debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ .
(a) shall be made before the termination time;
(b) shall be in the approved form; and
(c) shall specify the amount of the estimated class A debit being applied for.
(a) may determine an estimated class A debit not greater than the amount specified in the application; and
(b) shall serve notice of any such determination on the company.
(a) a company lodges an application with the Commissioner on a particular day (in this subsection called the ``application day'' ); and
(b) at the end of the twenty-first day after the application day, the Commissioner has neither:
(i) served notice of an estimated class A debit determination on the company; nor
(ii) refused to make an estimated class A debit determination;
the Commissioner shall be deemed, on the twenty-second day after the application day, to have:
(c) determined an estimated class A debit in accordance with the application; and
(d) served notice of the determination on the company.
A notice of an estimated class A debit determination has no effect if it is served after the termination time.
(a) has taken liability reduction action; or
(b) has paid an initial payment of tax under section 221AP ; or
(ba) has paid a company tax instalment;
the company may lodge an application with the Commissioner for:
(c) the determination of an estimated class B debit in relation to the liability reduction action or in relation to the payment of the initial payment of tax or the company tax instalment; or
(d) the determination of such an estimated class B debit in substitution for an earlier determination.
An estimated class B debit in relation to an initial payment of tax must relate to the refund of that payment under subsection 221AQ(3) , 221AR(6) or 221AU(4) .
160AQDA(2A) [Debit re company tax instalment]An estimated class B debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ .
(a) be made before the termination time; and
(b) be in the approved form; and
(c) specify the amount of the estimated class B debit applied for. 160AQDA(4) [Notice of Commissioner's determination]
(a) may determine an estimated class B debit not greater than the amount specified in the application; and
(b) must serve notice of any such determination on the company. 160AQDA(5) [No determination within 21 days]
(a) a company lodges an application with the Commissioner on a particular day (the ``application day'' ); and
(b) at the end of the 21st day after the application day, the Commissioner has neither:
(i) served notice of an estimated class B debit determination on the company; nor
(ii) refused to make an estimated class B debit determination;
the Commissioner is taken, on the 22nd day after the application day, to have:
(c) determined an estimated class Bdebit in accordance with the application; and
(d) served notice of the determination on the company. 160AQDA(6) [Notice served after termination time]
A notice of an estimated class B debit determination has no effect if it is served after the termination time.
(a) has taken liability reduction action; or
(b) has paid a company tax instalment;
the company may lodge an application with the Commissioner for:
(c) the determination of an estimated class C debit in relation to the liability reduction action or the company tax instalment; or
(d) the determination of such an estimated class C debit in substitution for an earlier determination. 160AQDAA(2) [Estimated class C debit in relation to company tax instalment]
An estimated class C debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ .
160AQDAA(2A) [PAYG instalment variation credit]An estimated class C debit in relation to a PAYG instalment must relate to a PAYG instalment variation credit in relation to the instalment.
(a) be made before the termination time; and
(b) be in the approved form; and
(c) specify the amount of the estimated class C debit applied for. 160AQDAA(4) [Commissioner's determination and notice]
(a) may determine an estimated class C debit not greater than the amount specified inthe application; and
(b) must serve notice of any such determination on the company. 160AQDAA(5) [Determination and notice deemed made]
(a) a company lodges an application with the Commissioner on a particular day (the application day ); and
(b) at the end of the 21st day after the application day, the Commissioner has neither:
(i) served notice of an estimated class C debit determination on the company; nor
(ii) refused to make an estimated class C debit determination;
the Commissioner is taken, on the 22nd day after the application day, to have:
(c) determined an estimated class C debit in accordance with the application; and
(d) served notice of the determination on the company. 160AQDAA(6) [Notice served after termination time]
A notice of an estimated class C debit determination has no effect if it is served after the termination time.
For the purposes of this Part, the class A required franking amount for a dividend paid to a shareholder in a company is the amount that would be the required franking amount for the dividend if:
(a) the reference in section 160AQE to the franking surplus of the company at the beginning of the reckoning day for the dividend were, by express provision, confined to the class A franking surplus of the company at the beginning of that day; and
(b) each reference in section 160AQE to a franked amount were, by express provision, confined to a class A franked amount; and
(c) each reference in section 160AQE to a required franking amount were, by express provision, confined to a class A required franking amount; and
(d) each reference in section 160AQE to a franking debit were, by express provision, confined to a class A franking debit. 160AQDB(2) [Class B required franking amount]
For the purposes of this Part, if the beginning of the reckoning day is before the company's class C conversion time, the class B required franking amount for a dividend paid to a shareholder in the company is worked out using the formula:
|
Gross required
franking amount |
- |
Class A required franking
amount |
where:
`` Gross required franking amount '' means the required franking amount for the dividend;
`` Class A required franking amount '' means the class A required franking amount for the dividend.
For the purposes of this Part, if the beginning of the reckoning day is after the company's class C conversion time, the class B required franking amount for a dividend paid to a shareholder in the company is nil.
For the purposes of this Part, if the beginning of the reckoning day is after the company's class C conversion time, the class C required franking amount for a dividend paid to a shareholder in the company is worked out using the formula:
|
Gross required
franking amount |
- |
Class A required franking
amount |
where:
Gross required franking amount means the required franking amount for the dividend.
Class A required franking amount means the class A required franking amount for the dividend.
For the purposes of this Part, if the beginning of the reckoning day is before the company's class C conversion time, the class C required franking amount for a dividend paid to a shareholder in the company is nil.
For the purposes of this Part, the required franking amount for a dividend (in this section called the ``current dividend'' ) paid during a franking year (in this section called the ``current franking year'' ) to a shareholder in a company is so much of the dividend as does not exceed:
(a) if only one provisional required franking amount applies under the following provisions of this section - that provisional required franking amount; or
(b) in any other case - the greater or greatest of the provisional required franking amounts applicable under the following provisions of this section (whether or not 2 such amounts are applicable under the same subsection). 160AQE(2) [Formula: provisional required franking amount]
The amount calculated in accordance with the following formula is a provisional required franking amount:
where:
CD is the amount of the current dividend;
CFD is the number of dollars in the total amount of the committed future dividends of the company at the beginning of the reckoning day for the current dividend (other than dividends included in component TD );
RFS is the number of dollars in the amount of the franking surplus of the company at the beginning of the reckoning day for the current dividend being that franking surplus reduced, for each frankable dividend (in this definition called an ``earlier dividend'' ) payable to a shareholder in the company that:
by the greater of:
SDD is the number of dollars in the total amount of frankable dividends that:
(other than dividends included in component CFD or component TD );
TD is:
LD is:
SD is:
(a) a franked dividend having a reckoning day earlier in the franking year than the reckoning day for the current dividend has been paid to a shareholder in the company;
(b) the franked amount of that earlier franked dividend exceeded the required franking amount for that earlier franked dividend; and
(c) at the beginning of that earlier reckoning day, the current dividend was a committed future dividend;
the amount calculated in accordance with the following formula is a provisional required franking amount:
| CD × |
EFA
EFD |
where:
CD is the amount of the current dividend;
EFA is the number of dollars in the franked amount of the earlier franked dividend; and
EFD is the number of dollars in the amount of the earlier franked dividend.
160AQE(4) [Dividends with same reckoning day](a) a franked dividend other than the current dividend is paid on the reckoning day for the current dividend;
(b) the other dividend and the current dividend are not paid under the same resolution;
(c) the reckoning day for the other dividend is the same as the reckoning day for the current dividend; and
(d) the required franking amount for that other franked dividend, calculated without regard to this subsection, is less than the franked amount of that other franked dividend;
the amount calculated in accordance with the following formula is a provisional required franking amount:
| CD × |
OFA
OFD |
where:
CD is the amount of the current dividend;
OFA is the number of dollars in the franked amount of the other dividend; and
OFD is the number of dollars in the amount of the other dividend.
160AQE(5) [Deemed off-market purchase]In calculating a provisional required franking amount, each on-market purchase of a share by a company is taken to be an off-market purchase.
In this section:
"franking surplus"
, in relation to a company at a particular time, means the sum of:
(a) the class A franking surplus (if any) of the company as at that time; and
(b) the class B franking surplus (if any) of the company as at that time; and
(c) the class C franking surplus (if any) of the company as at that time.
(a) a frankable dividend (in this subsection called the ``current dividend'' ) is paid to a shareholder in a company; and
(b) the company is a resident at the time of payment; and
(c) if the current dividend is paid under a resolution:
(i) before the reckoning day for the current dividend, the company makes a declaration that each dividend to which the resolution relates is a class A franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration in relation to the dividend; and
(ii) the percentage so specified is the same for each of the dividends to which the resolution relates; and
(d) if the current dividend is not paid under a resolution - the company makes a declaration before the reckoning day for the current dividend that the current dividend is a class A franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration;
the current dividend shall be taken to have been class A franked to the extent of the amount calculated in accordance with the formula:
| CD × SP |
where:
CD is the amount of the current dividend; and
SP is the percentage specified in the declaration in relation to the dividend.
Note:
Because of subsection 46M(3) and paragraph 46M(4)(a) , paragraph (c) of this subsection does not apply to dividends that are taken by subsection 46M(3) or paragraph 46M(4)(a) not to be frankable dividends.
(a) a frankable dividend (in this subsection called the ``current dividend'' ) is paid to a shareholder in a company; and
(b) the company is a resident at the time of payment; and
(c) if the current dividend is paid under a resolution:
(i) before the reckoning day for the current dividend, the company makes a declaration that each dividend to which the resolution relates is a class B franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration in relation to the dividend; and
(ii) the percentage so specified is the same for each of the dividends to which the resolution relates; and
(d) if the current dividend is not paid under a resolution - the company makes declaration before the reckoning day for the current dividend that the current dividend is a class B franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration;
the current dividend is taken to have been class B franked to the extent of the amount worked out using the formula:
| Current dividend × Specified percentage |
where:
`` Current dividend '' means the amount of the current dividend;
`` Specified percentage '' means the percentage specified in the declaration in relation to the dividend.
Note:
Because of subsection 46M(3) and paragraph 46M(4)(a) , paragraph (c) of this subsection does not apply to dividends that are taken by subsection 46M(3) or paragraph 46M(4)(a) not to be frankable dividends.
(a) a frankable dividend (the current dividend ) is paid to a shareholder in a company; and
(b) the company is a resident at the time of payment; and
(c) if the current dividend is paid under a resolution:
(i) before the reckoning day for the current dividend, the company makes a declaration that each dividend to which the resolution relates is a class C franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration in relation to the dividend; and
(ii) the percentage so specified is the same for each of the dividends to which the resolution relates; and
(d) if the current dividend is not paid under a resolution - the company makes a declaration before the reckoning day for the current dividend that the current dividend is a class C franked dividend to the extent of a percentage (not exceeding 100%) specified in the declaration;
the current dividend is taken to have been class C franked to the extent of the amount worked out using the formula:
| Current dividend × Specified percentage |
where:
Current dividend means the amount of the current dividend.
Specified percentage means the percentage specified in the declaration in relation to the dividend.
Note:
Because of subsection 46L(3) and paragraph 46L(4)(a) , paragraph (c) of this subsection does not apply to dividends that are taken by subsection 46L(3) or paragraph 46L(4)(a) not to be frankable dividends.
Despite subsections (1) and (1AA), a dividend is taken not to have been class A franked or class B franked if the sum of:
(a) the class A franked amount of the dividend; and
(b) the class B franked amount of the dividend;
exceeds the amount of the dividend.
Despite subsections (1) and (1AAA), a dividend is taken not to have been class A franked or class C franked if the sum of:
(a) the class A franked amount of the dividend; and
(b) the class C franked amount of the dividend;
exceeds the amount of the dividend.
Where a company that is making a declaration for the purposes of subsection (1) wishes part of each dividend to which the declaration relates to be taken into account in determining whether the company has made a sufficient distribution for the purposes of Division 7 of Part III in relation to a particular year of income, the company may, as well as specifying a percentage for the purposes of subsection (1), specify a greater percentage (not exceeding 100%) for the purposes of this subsection in relation to that year of income.
A declaration made for the purposes of this section cannot be varied or revoked.
160AQF(3) [Former exempting company's variation or revocation](a) an exempting company makes a declaration under subparagraph 160AQF(1)(c)(i) , paragraph 160AQF(1)(d) , subparagraph 160AQF(1AAA)(c)(i) or paragraph 160AQF(1AAA)(d) in relation to a dividend or dividends; and
(b) the company becomes a former exempting company before the reckoning day for the dividend or for at least one of the dividends;
subsection (2) does not prevent the company from varying or revoking the declaration.
(a) a frankable dividend (the current dividend ) is paid by a former exempting company to a shareholder in that company; and
(b) the company is a resident at the time of payment; and
(c) where the current dividend is paid under a resolution:
(i) the company makes a declaration, before the reckoning day for the current dividend, that each dividend to which the resolution relates is a class A exempted dividend to the extent of a percentage (not exceeding 100%) specified in the declaration in relation to the dividend; and
(ii) the percentage so specified is the same for each of the dividends to which the resolution relates; and
(d) where the current dividend is not paid under a resolution - the company makes a declaration before the reckoning day for the current dividend that the current dividend is a class A exempted dividend to the extent of a percentage (not exceeding 100%) specified in the declaration;
the current dividend is taken to have been class A exempted to the extent of the amount calculated in accordance with the formula:
| Current dividend × Specified percentage |
where:
current dividend
is the amount of the current dividend.
specified percentage
is the percentage specified in the declaration in relation to the dividend.
Note:
Because of subsection 46M(3) and paragraph 46M(4)(a) , paragraph (c) of this subsection does not apply to dividends that are taken by subsection 46M(3) or paragraph 46M(4)(a) not to be frankable dividends.
160AQFA(2) Franking with class C exempted amount.(a) a frankable dividend (the current dividend ) is paid by a former exempting company to a shareholder in that company; and
(b) the company is a resident at the time of payment; and
(c) if the current dividend is paid under a resolution:
(i) before the reckoning day for the current dividend, the company makes a declaration that each dividend to which the resolution relates is a class C exempted dividend to the extent of a percentage (not exceeding 100%) specified in the declaration in relation to the dividend; and
(ii) the percentage so specified is the same for each of the dividends to which the resolution relates; and
(d) if the current dividend is not paid under a resolution - the company makes a declaration before the reckoning day for the current dividend that the current dividend is a class C exempted dividend to the extent of a percentage (not exceeding 100%) specified in the declaration;
the current dividend is taken to have been class C exempted to the extent of the amount worked out using the formula:
| Current dividend × Specified percentage |
where:
current dividend
means the amount of the current dividend.
specified percentage
means the percentage specified in the declaration in relation to the dividend.
Note:
Because of subsection 46M(3) and paragraph 46M(4)(a) , paragraph (c) of this subsection does not apply to dividends that are taken by subsection 46M(3) or paragraph 46M(4)(a) not to be frankable dividends.
160AQFA(3) Limits on exempted amounts.Despite subsections (1) and (2), a dividend is taken not to have been class A exempted or class C exempted if the sum of:
(a) the class A exempted amount of the dividend; and
(b) the class C exempted amount of the dividend; and
(c) any class A franked amount of the dividend; and
(d) any class C franked amount of the dividend;
exceeds the amount of the dividend.
160AQFA(4) Franking with exempted amounts limited to dividends on certain shares.A dividend is taken by subsection (1) or (2) to be class A exempted or class C exempted only to the extent (if any) to which it is paid to:
(a) an eligible continuing substantial shareholder; or
(b) an employee who acquired the share in respect of which the dividend is paid under an eligible employee share scheme. 160AQFA(5) All dividends paid under resolution to be franked to same extent.
A former exempting company is not entitled to make a declaration under subparagraph (1)(c)(i) or (2)(c)(i) specifying a percentage in relation to a dividend paid to a shareholder in the company unless it also makes a declaration under that subparagraph specifying the same percentage in relation to each other frankable dividend in the same combined class of dividends that it paid to a shareholder in the company.
160AQFA(6) All dividends not paid under resolution to be franked to same extent.A former exempting company is not entitled to make a declaration under paragraph (1)(d) or (2)(d) specifying a percentage in relation to a dividend paid to a shareholder in the company unless it also makes a declaration under that paragraph specifying the same percentage in relation to each other frankable dividend in the same combined class of dividends that it paid during the same franking year to a shareholder in the company.
160AQFA(7) Declaration to be irrevocable.A declaration made for the purposes of this section cannot be varied or revoked.
160AQFA(8) Combined class of dividends.In this section:
combined class of dividends
has the meaning given by subsection
160AQG(1)
.
The dividends paid during a franking year to shareholders in a company that satisfy the following conditions shall be taken to constitute a combined class of dividends:
(a) the dividends are paid in respect of shares of the same class (in this subsection called the ``applicable class'' );
(b) each of the dividends is paid under a resolution, but not all the dividends are paid under the same resolution;
(c) for each resolution to which paragraph (b) applies, the dividends to which the resolution relates are to be paid on only some of the shares of the applicable class. 160AQG(2) [Resolution under which dividends paid]
Dividends that constitute a combined class of dividends shall be taken for the purposes of section 160AQF or 160AQFA to have been paid under the resolution under which the first of those dividends was paid and not under any other resolution.
This section does not apply in relation to a dividend paid by a company if the payment of the dividend gives rise to a franking debit of the company under section
160AQCB
.
Note:
Because of subsection 46M(3) and paragraph 46M(4)(a) , this section does not apply to dividends that are taken by that subsection or paragraph not to be frankable dividends.
If a company has a franking year that includes, but does not start on, 1 July 2000, subsections (1) to (3) apply to the company as if the following periods were separate franking years:
(a) the period starting at the start of the company's franking year and ending on 30 June 2000;
(b) the period starting on 1 July 2000 and ending at the end of the franking year.
If a company has a franking year that includes, but does not start on, 1 July 2001, subsections (1) to (3) apply to the company as if the following periods were separate franking years:
(a) the period starting at the start of the company's franking year and ending on 30 June 2001;
(b) the period starting on 1 July 2001 and ending at the end of the franking year.
A company that is a resident at the time of payment of a frankable dividend to a shareholder in the company shall, before or at the time of payment of the dividend, give to the shareholder a statement in the approved form setting out:
(a) if the company is not a former exempting company and the dividend is not a franked dividend - a declaration to that effect; and
(aa) if the company is a former exempting company and the dividend is neither a franked dividend nor an exempted dividend - a declaration to that effect; and
(b) if the dividend is a franked dividend:
(i) the class A franked amount of the dividend (if any), the class B franked amount of the dividend (if any), the class C franked amount of the dividend (if any) and, if the company is a PDF, the venture capital franked amount of the dividend (if any); and
(ii) (Repealed by No 93 of 1999)
(iii) if the dividend is a class A franked dividend - the amount worked out in relation to the dividend using the formula in subsection 160AQT(1) (whether or not that subsection applies to the dividend); and
(iv) if the dividend is a class B franked dividend - the amount worked out in relation to the dividend using the formula in subsection 160AQT(1AA) (whether or not that subsection applies to the dividend); and
(iva) if the dividend is a class C franked dividend - the amount worked out in relation to the dividend using the formula in subsection 160AQT(1AB) (whether or not that subsection applies to the dividend) and a statement to the effect that the applicable general company tax rate used in that formula was 30%; and
(v) the sum of the amounts mentioned in subparagraphs (iii), (iv) and (iva); and
(vi) any amount deducted from the dividend under section 221YL or withheld from the dividend under Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 ; and
(vii) if the dividend is a venture capital franked dividend - a statement to the effect that the venture capital franking is only relevant for a taxpayer who is:
(A) the trustee of a fund that is a complying superannuation fund for the purposes of Part IX in relation to the year of income; or
(B) the trustee of a fund that is a complying ADF for the purposes of Part IX in relation to the year of income; or
(C) the trustee of a unit trust that is a pooled superannuation trust for the purposes of Part IX in relation to the year of income; or
(D) a life assurance company; or
(E) a registered organisation; and
(c) if the dividend is an exempted dividend - the exempted amount of the dividend; and
(d) if the company is not a former exempting company and the dividend is a franked dividend - the amount of the dividend that is not a franked amount; and
(e) if the company is a former exempting company and the dividend is a franked dividend or an exempted dividend or both - the amount of the dividend that is neither a franked amount nor an exempted amount; and
(f) in any case - such other information in relation to the dividend as is required by the approved form to be set out.
An exempting company that pays a dividend to a shareholder in the company must, before or at the time of payment of the dividend, give to the shareholder a statement to the effect that Australian resident shareholders are not entitled to a franking rebate or franking credit in respect of the dividend except for certain companies and employees who receive the dividend in connection with an eligible employee share scheme.
Where a company has a class A franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount calculated in accordance with the formula:
where:
CR is the applicable general company tax rate; and
FD is the amount of the class A franking deficit.
If a company has a class B franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount worked out using the formula:
where:
`` Franking deficit '' means the amount of the class B franking deficit;
`` Company tax rate '' means the applicable general company tax rate.
If a company has a class C franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount worked out using the formula:
where:
Franking deficit means the amount of the class C franking deficit.
Company tax rate means the applicable general company tax rate.
The amount of tax that a PDF would otherwise be liable to pay under subsection (1B) in relation to a franking year is reduced by the amount (if any) of the venture capital deficit tax the PDF is liable to pay in relation to that franking year under section 160ASEN .
Where a company that has, in respect of a year of income:
(a) given a notice under paragraph 221AQ(1)(a) ; and
(b) made an initial payment of tax under section 221AP ;
would, but for this subsection, be liable to pay tax under subsection (1) or (1A), or both, of this section in respect of the franking year in which the last day of that year of income occurs (in this subsection called the ``relevant franking deficit tax'' ):
(c) if the company is not a life assurance company and the amount of the relevant franking deficit tax does not exceed the amount of the initial payment of tax - the company is not liable to pay tax under subsection (1) or (1A), as the case may be, in respect of that franking year; or
(d) if the company is not a life assurance company and the amount of the relevant franking deficit tax exceeds the amount of the initial payment of tax - the tax that the company is liable to pay under subsection (1) or (1A), as the case may be, in respect of that franking year is an amount worked out using the formula:
| Excess × |
Particular franking
deficit tax Relevant franking deficit tax |
where:
(e) if the company is a life assurance company and the amount of the relevant franking deficit tax does not exceed the amount calculated using the formula:
| Inital payment - Fund component |
where:
the company is not liable to pay tax under subsection (1) or (1A), as the case may be, in respect of that franking year; or
(f) if the company is a life assurance company and the amount of the relevant franking deficit tax exceeds the amount calculated using the formula:
| Initial payment - Fund component |
where:
the tax that the company is liable to pay under subsection (1) or (1A), as the case may be, in respect of that franking year is an amount worked out using the formula:
| Excess × |
Particular franking
deficit tax Relevant franking deficit tax |
where:
(a) during a franking year (the ``first franking year'' ) a life assurance company pays one or more instalments under section 221AZK for a year of income; and
(b) at a particular time during the next franking year (the ``second franking year'' ) the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ; and
(c) assuming that the refund, together with any previous refund of one or more instalments, for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class A franking deficit, or an increased class A franking deficit, at the end of the first franking year;
a class A deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.
160AQJA(2) Class A deficit deferral amount.The ``class A deficit deferral amount'' is the amount of the class A franking deficit, or the amount of the increase in the class A franking deficit, referred to in paragraph (1)(c).
160AQJA(3) Amount of class A deficit deferral tax.If a class A deficit deferral amount arises in relation to a company and a refund, the company is liable to pay class A deficit deferral tax in relation to the refund. The amount of the tax is the gross class A deficit deferral amount (see subsection (4)) reduced by any class A deficit deferral tax already payable by the company in relation to refunds received in the second franking year.
160AQJA(4) Gross class A deficit deferral amount.The ``gross class A deficit deferral amount'' is worked out using the following formula:
160AQJA(5) Additional amounts taken to be part of instalment.
If an amount is paid under subsection 221AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.
(a) during a franking year (the ``first franking year'' ) a company pays one or more instalments under section 221AZK for the 1994-95 year of income; and
(b) at a particular time during thenext franking year (the ``second franking year'' ) the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ ; and
(c) assuming that the refund, together with any previous refund of one or more instalments for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class B franking deficit, or an increased class B franking deficit, at the end of the first franking year;
a class B deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.
The ``class B deficit deferral amount'' is the amount of the class B franking deficit, or the amount of the increase in the class B franking deficit, referred to in paragraph (1)(c).
160AQJB(3) Amount of class B deficit deferral tax.If a class B deficit deferral amount arises in relation to a company and a refund, the company is liable to pay class B deficit deferral tax in relation to the refund. The amount of the tax is the gross class B deficit deferral amount (see subsection (4)) reduced by any class B deficit deferral tax already payable by the company in relation to refunds received in the second franking year.
160AQJB(4) Gross class B deficit deferral amount.The ``gross class B deficit deferral amount'' is worked out using the following formula:
160AQJB(5) Additional amounts taken to be part of instalment.
If an amount is paid under subsection 221AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.
(a) during a franking year (the first franking year ) a company pays one or more instalments under section 221AZK for the 1995-96 year of income or a later year of income; and
(b) at a particular time during the next franking year (the second franking year ) the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ ; and
(c) assuming that the refund, together with any previous refund of one or more instalments for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class C franking deficit, or an increased class C franking deficit, at the end of the first franking year;
a class C deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.
160AQJC(1A) [PAYG instalment variation credit](a) during a franking year (the first franking year ) a company pays one or more PAYG instalments in respect of a year of income; and
(b) at a particular time during the next franking year (the second franking year ), a PAYG instalment variation credit for the company arises in relation to the instalment or one or more of the instalments; and
(c) the company would have had a class C franking deficit, or an increased class C franking deficit, at the end of the first franking year assuming that the PAYG instalment variation credit, together with any previous PAYG instalment variation credit in respect of the year of income, had arisen on the last day of the first franking year;
a class C deficit deferral amount (defined in subsection (2)) arises in relation to the company and the PAYG instalment variation credit.
The class C deficit deferral amount is the amount of the class C franking deficit, or the amount of the increase in the class C franking deficit, referred to in paragraph (1)(c) or (1A)(c).
If the company is a PDF, the class C deficit deferral amount is reduced by the extent (if any) to which the refund gives rise to, or increases, a liability of the PDF to venture capital deficit tax because of the operation of subsection 4(2) of the Venture Capital Deficit Tax Act. The reduction under this subsection is reduced by the extent (if any) to which the refunds produced a reduction in the PDF's class C franking deficit tax under subsection 160AQJ(1C) .
If a class C deficit deferral amount arises in relation toa company and a refund or PAYG instalment variation credit, the company is liable to pay class C deficit deferral tax in relation to the refund or PAYG instalment variation credit. The amount of the tax is the gross class C deficit deferral amount (see subsection (4)) reduced by any class C deficit deferral tax already payable by the company in relation to refunds or PAYG instalment variation credits received in the second franking year.
The gross class C deficit deferral amount is worked out using the formula:
| Class C deficit deferal amount × |
30
70 |
If an amount is paid under subsection 221AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.
Subject to this Subdivision, where:
(a) a company has become liable to pay:
(i) class A franking deficit tax for a franking year; or
(ii) class B franking deficit tax for a franking year; or
(iia) class C franking deficit tax for a franking year; or
(iii) class A deficit deferral tax in relation to the refund of one or more instalments paid during a franking year; or
(iv) class B deficit deferral tax in relation to the refund of one or more instalments paid during a franking year; or
or any combination of these taxes in respect of the same franking year; and
(v) class C deficit deferral tax in relation to the refund of one or more instalments paid during a franking year;
(b) after the end of the franking year:
(i) the Commissioner serves on the company a notice of an original company tax assessment for an eligible year of income in which the company was sufficiently resident; or
(ii) the Commissioner serves on the company a notice of an amended company tax assessment for an eligible year of income in which the company was sufficiently resident, being an amendment that increases the company tax of the company;
the Commissioner shall determine that the company is entitled to an offset in relation to that company tax or increased company tax equal to the amount specified in the determination, being the lesser of the following amounts:
(c) the sum of the class A franking deficit tax, the class B franking deficit tax, the class C franking deficit tax, the class A deficit deferral tax, the class B deficit deferral tax and the class C deficit deferral tax, reduced by any part of it that has been previously applied under this Subdivision;
(d) the amount of the company tax, or increased company tax, reduced by any foreign tax credits allowable in respect of tax paid or payable by the company in respect of income derived in the eligible year of income.
Where a company becomes entitled to an offset in relation to company tax or increased company tax, the company's liability to pay that company tax, or increased company tax, shall be reduced by the amount of the offset.
160AQK(3) [No application to life assurance company]This section does not apply to a life assurance company in relation to a liability to pay franking deficit tax or deficit deferral tax for a franking year that ends on or after 4 May 1999.
A company may, for the purpose of making a claim for an offset in relation to a year of income (being a claim made in the return furnished by the company in respect of income of that year of income or made after the furnishing of that return), determine:
(a) whether an offset is allowable to the company; and
(b) if the company determines that an offset is so allowable - the amount of the offset. 160AQKA(2) [No application to life assurance company]
This section does not apply to a life assurance company in relation to a liability to pay franking deficit tax or deficit deferral tax for a franking year that ends on or after 4 May 1999.
Subject to this Subdivision, where:
(a) a life assurance company has become liable to pay one or more of the following in relation to a franking year that ends on or after 4 May 1999:
(i) class A franking deficit tax for the franking year;
(ii) class C franking deficit tax for the franking year;
(iii) class A deficit deferral tax in relation to the refund of one or more instalments paid during the franking year;
(iv) class C deficit deferral tax in relation to the refund of one or more instalments paid during the franking year; and
(b) after the end of the franking year, the Commissioner serves on the company a notice of an original company tax assessment for an eligible year of income in which the company was sufficiently resident;
the Commissioner must determine that the company is entitled to an offset in relation to that company tax equal to the amount specified in the determination.
160AQKAA(2) Determination to specify lesser of 2 amounts.The amount specified in the determination must be the lesser of the following amounts:
(a) the sum of the class A franking deficit tax, the class A deficit deferral tax, the class C franking deficit tax and the class C deficit deferral tax, reduced by any part of it that has been previously applied under this Subdivision;
(b) the amount, worked out under section 160AQKAB , of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits, reduced by any foreign tax credits allowable in respect of tax paid or payable by the company in respect of income derived in the eligible year of income. 160AQKAA(3) Determination by Commissioner - amended assessment.
Subject to this Subdivision, where:
(a) a life assurance company has become liable to pay one or more of the following in relation to a franking year that ends on or after 4 May 1999:
(i) class A franking deficit tax for the franking year;
(ii) class C franking deficit tax for the franking year;
(iii) class A deficit deferral tax in relation to the refund of one or more instalments paid during the franking year;
(iv) class C deficit deferral tax in relation to the refund of one or more instalments paid during the franking year; and
(b) after the end of the franking year, the Commissioner serves on the company a notice of an amended company tax assessment for an eligible year of income in which the company was sufficiently resident;
then:
(c) any determination already made by the Commissioner under this section as a result of the service on the company of an original or amended company tax assessment for the eligible year of income is revoked; and
(d) except for the purposes of section 160AQKAD , the company is not entitled, and is taken never to have been entitled, to an offset under any such determination; and
(e) the Commissioner must make a new determination that the company is entitled to an offset in relation to its company tax for the eligible year of income equal to the amount specified in the new determination. 160AQKAA(4) Determination to specify lesser of 2 amounts.
The amount specified in the new determination must be the lesser of the following amounts:
(a) the sum of the class A franking deficit tax, the class A deficit deferral tax, the class C franking deficit tax and the class C deficit deferral tax, reduced by any part of it that has been previously applied under this Subdivision in relation to an eligible year of income other than the eligible year of income for which the amended assessment is made;
(b) the amount, worked out under section 160AQKAB , of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits, reduced by any foreign tax credits allowable in respect of tax paid or payable by the company in respect of income derived in the eligible year of income. 160AQKAA(5) Company may claim offset.
The company may, for the purposes of making a claim for an offset under this section in relation to a year of income, determine:
(a) whether an offset is allowable to the company; and
(b) if the company determines that an offset is so allowable - the amount of the offset. 160AQKAA(6) [Timing of offset claim]
A claim under subsection (5) must be made after the end of a franking year that ends on or after 4 May 1999 in the return furnished by the company in respect of income of that year of income or after the furnishing of that return.
If an eligible year of income of a life assurance company ends before 1 July 2000, the amount of the company's liability to pay company tax for that year that would normally give rise to franking credits is the amount of the company's liability to pay company tax for that year, reduced by the sum of the following:
(a) the amount of the company tax that is attributable to the RSA component of the taxable income of the company for the year of income;
(b) 80% of the amount of the company tax that is not attributable to the general fund component of the taxable income of the company for the year of income. 160AQKAB(2) 1999-2000 year of income ending on or after 1 July 2000.
If the 1999-2000 year of income of a life assurance company ends on or after 1 July 2000, the amount of the company's liability to pay company tax for that year that would normally give rise to franking credits is the amount of the company's liability to pay company tax for that year, reduced by the sum of the following:
(a) the amount of the company tax that is attributable to income earned before 1 July 2000 and also attributable to the RSA component of the taxable income of the company for the year of income;
(b) 80% of the amount of the company tax that is attributable to income earned before 1 July 2000 and is not attributable to the general fund component of the taxable income of the company for the year of income;
(c) the amount of the company tax that is attributable to income earned on or after 1 July 2000 and is not attributable to shareholders' funds income. 160AQKAB(3) 2000-01 year of income begins before 1 July 2000.
If the 2000-01 year of income of a life assurance company begins before 1 July 2000, the amount of the company's liability to pay company tax for that year that would normally give rise to franking credits is the amount of the company's liability to pay company tax for that year, reduced by the sum of the following:
(a) the amount of the company tax that is attributable to income earned before 1 July 2000 and also attributable to the RSA component of the taxable income of the company for the year of income;
(b) 80% of the amount of the company tax that is attributable to income earned before 1 July 2000 and is not attributable to the general fund component of the taxable income of the company for the year of income;
(c) the amount of the company tax that is attributable to income earned on or after 1 July 2000 and is not attributable to shareholders' funds income. 160AQKAB(4) Other years of income.
If an eligible year of income of a life assurance company ends on or after 1 July 2000 and is not dealt with in subsection (2) or (3), the amount of the company's liability to pay company tax for that year that would normally give rise to franking credits is the amount of the company's liability to pay company tax for that year that is attributable to shareholders' funds income.
160AQKAB(5) Working out the company tax for the year.For the purposes of this section, the amount of the company's liability to pay company tax for a year of income is:
(a) if an original company tax assessment for the year of income has been served on the company and has not (or not yet) been amended - the amount of the company's liability to pay company tax for that year under that assessment; and
(b) if an amended company tax assessment for the year of income is served on the company - the amount of the company's liability to pay company tax for that year under that assessment. 160AQKAB(6) Definition.
For the purposes of this section:
RSA component
has the same meaning as in Division
8
of Part
III
(as in force immediately before 1 July 2000).
If the Commissioner determines that a life assurance company is entitled to an offset under section 160AQKAA in relation to company tax for an eligible year of income, the company's liability to pay company tax for the eligible year of income is reduced by the amount of the offset.
The object of this section is to ensure that, if the Commissioner determines that a life assurance company is entitled to an offset under section 160AQKAA , franking credits and debits that arise in relation to the company's company tax for the eligible year of income do not exceed those that would have arisen if the company had not received the offset under section 160AQKAC and instead satisfied its unreduced liability to pay company tax.
160AQKAD(2) Overview of section.That object is achieved by reversing any previous franking credits and debits and recalculating them each time a determination is made by the Commissioner as a result of an original or amended company tax assessment. If the company pays a PAYG instalment or company tax, or receives a refund of company tax, after the original or amended company tax assessment that resulted in the determination is served on the company, a separate franking credit or debit will be generated (which may be subject to reversal as a result of a later assessment and determination).
160AQKAD(3) No franking credits or franking debits except under this section.No franking credit or franking debit arises in relation to the company's company tax for the eligible year of income on or after the day on which the original company tax assessment for that year is served on the company, except under this section.
160AQKAD(4) Reversing out franking credits and debits that arose before the original company tax assessment.If the determination is made under subsection 160AQKAA(1) (a determination made as a result of the original company tax assessment for the eligible year of income):
(a) a class C franking debit arises on the day on which the original company tax assessment is served on the company equal to the sum of all class C franking credits that have arisen in relation to the company's company tax for the eligible year of income before that day; and
(b) a class C franking credit arises on the day on which the original company tax assessment is served on the company equal to the sum of all class C franking debits that have arisen in relation to the company's company tax for the eligible year of income before that day. 160AQKAD(5) Franking credit on original company tax assessment.
On the day on which the original company tax assessment is served on the company, a class C franking credit equal to the adjusted amount of the amount worked out using the following formula arises:
where:
amount of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits
is the amount worked out for the company for that year under section
160AQKAB
.
reduced liability to pay company tax
means the amount, after the reduction under section
160AQKAC
is made, of the company's liability to pay company tax for the eligible year of income (worked out in accordance with the original company tax assessment).
total payments of PAYG instalments and company tax
means the sum of all PAYG instalments and company tax for the eligible year of income paid by the company on or before the day on which the original company tax assessment is served.
Note:
If payments or refunds of company tax are made after the original company tax assessment is served on the company, franking credits and debits arise for those under subsections (8) and (10).
160AQKAD(6) Reversing out franking credits and debits that arose before an amended company tax assessment.If the determination is made under subsection 160AQKAA(3) (a determination made as a result of an amended company tax assessment for the eligible year of income):
(a) a class C franking debit arises on the day on which the amended company tax assessment is served on the company equal to the sum of all class C franking credits that have arisen before that day in relation to the company's company tax for the eligible year of income, other than class C franking credits in relation to which a class C franking debit has already arisen because of a previous application of this section; and
(b) a class C franking credit arises on the day on which the amended company tax assessment is served on the company equal to the sum of all class C franking debits that have arisen before that day in relation to the company's company tax for the eligible year of income, other than class C franking debits in relation to which a class C franking credit has already arisen because of a previous application of this section.
Note:
For example, if the amended company tax assessment is the first or only amended assessment, subsection (6) will reverse any franking credit arising under subsection (5) in respect of the original company tax assessment, and franking credits and debits arising under subsections (8) and (10) for payments and refunds of company tax made between the serving of the original company tax assessment and the amended company tax assessment.
160AQKAD(7) Franking credit on amended company tax assessment.On the day on which the amended company tax assessment is served on the company, a class C franking credit equal to the adjusted amount of the amount worked out using the following formula arises:
where:
amount of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits
is the amount worked out for the company for that year under section
160AQKAB
.
reduced liability to pay company tax
means the amount, after the reduction under section
160AQKAC
is made, of the company's liability to pay company tax for the eligible year of income (worked out in accordance with the amended company tax assessment).
total payments of PAYG instalments and company tax less refunds
means the sum of all PAYG instalments and company tax for the eligible year of income paid by the company on or before the day on which the amended company tax assessment is served less the sum of all refunds of company tax for the eligible year of income received by the company on or before that day.
A class C franking credit arises if the company pays a PAYG instalment or company tax for the eligible year of income:
(a) in a case where the determination is made under subsection 160AQKAA(1) (a determination made as a result of the original company tax assessment for the eligible year of income) - after the day on which the original company tax assessment is served on the company and before the day on which the first or only amended company tax assessment (if any) is served on the company; and
(b) in a case where the determination is made under subsection 160AQKAA(3) (a determination made as a result of an amended company tax assessment for the eligible year of income) - after the day on which the amended company tax assessment is served on the company and before the day on which the next amended company tax assessment (if any) is served on the company. 160AQKAD(9) [Class C franking credit]
The class C franking credit arises on the day on which the payment is made and is equal to the adjusted amount of the amount worked out using the formula:
where:
amount of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits
is the amount worked out for the company for that year under section
160AQKAB
.
reduced liability to pay company tax
means the amount, after the reduction under section
160AQKAC
is made, of the company's liability to pay company tax for the eligible year of income (worked out in accordance with the assessment that resulted in the most recent determination).
A class C franking debit arises if the company receives a refund of company tax for the eligible year of income:
(a) in a case where the determination is made under subsection 160AQKAA(1) (a determination made as a result of the original company tax assessment for the eligible year of income) - after the day on which the original company tax assessment is served on the company and before the day on which the first or only amended company tax assessment (if any) is served on the company; and
(b) in a case where the determination is made under subsection 160AQKAA(3) (a determination made as a result of an amended company tax assessment for the eligible year of income) - after the day on which the amended company tax assessment is served on the company and before the day on which the next amended company tax assessment (if any) is served on the company. 160AQKAD(11) [Class C franking debit]
The class C franking debit arises on the day on which the refund is received and is equal to the adjusted amount of the amount worked out using the following formula:
where:
amount of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits
is the amount worked out for the company for that year under section
160AQKAB
.
reduced liability to pay company tax
means the amount, after the reduction under section
160AQKAC
is made, of the company's liability to pay company tax for the eligible year of income (worked out in accordance with the assessment that resulted in the most recent determination).
(a) a life assurance company (the subsidiary company ) has become liable to pay one or more of the following in relation to a franking year that ends before 4 May 1999:
(i) class A franking deficit tax for the franking year;
(ii) class C franking deficit tax for the franking year;
(iii) class A deficit deferral tax in relationto the refund of one or more instalments paid during the franking year;
(iv) class C deficit deferral tax in relation to the refund of one or more instalments paid during the franking year; and
(b) some or all (the available deficit/deferral tax liability ) of that franking deficit tax or deficit deferral tax liability has not given rise to an entitlement to an offset under section 160AQK before 4 May 1999; and
(c) at all times during the period beginning at the start of the franking year and ending on the day on which an original assessment is made in relation to the subsidiary company in relation to the last year of income in which a liability mentioned in paragraph (a) arises:
(i) the subsidiary company was a wholly-owned subsidiary (as defined in section 121AP ) of another company (the holding company ); and
160AQKAE(2) Consequences for the subsidiary company under this section.
(ii) both companies were residents of Australia.
The subsidiary company is not entitled to an offset under section 160AQK in relation to the available deficit/deferral tax liability.
160AQKAE(3) [Subsidiary company entitled to an offset](a) the subsidiary company satisfies in whole or in part (which whole or part is the deficit/deferral tax amount ) the available deficit/deferral tax liability; and
(b) on or after 4 May 1999:
(i) the Commissioner serves on the subsidiary company a notice of an original company tax assessment for an eligible year of income in which the company was sufficiently resident; or
(ii) the Commissioner serves on the subsidiary company a notice of an amended company tax assessment for an eligible year of income in which the company was sufficiently resident, being an amendment that increases the company tax of the company;
the Commissioner must determine that the subsidiary company is entitled to an offset in relation to the company tax, or increased company tax, equal to the amount specified in the determination.
160AQKAE(4) [Amount of offset]The amount specified in the determination must be the lesser of the following amounts:
(a) the deficit/deferral tax amount, reduced by any part of it that has been previously applied under this section;
(b) the amount of the company tax or increased company tax, reduced by any foreign tax credits allowable in respect of tax paid or payable by the company in respect of income derived in the eligible year of income. 160AQKAE(5) Company may claim offset.
The subsidiary company may, for the purposes of making a claim for an offset under this section in relation to a year of income, determine:
(a) whether an offset is allowable to the subsidiary company; and
(b) if the subsidiary company determines that an offset is so allowable - the amount of the offset. 160AQKAE(6) [Timing of claim]
A claim under subsection (5) must be made on or after 4 May 1999 in the return furnished by the company in respect of income of that year of income or after the furnishing of that return.
160AQKAE(7) Further consequences if a determination is made.If the subsidiary company is entitled to an offset under a determination made under this section:
(a) for the purposes of Division 2 of this Part, the subsidiary company is taken to have made a payment of company tax for the eligible year of income equal to the offset specified in the determination, and not to have satisfied the liability mentioned in paragraph (1)(a); and
(b) any franking credit or debit that arises because of that payment is taken to arise on 7 June 2001 or the day on which the subsidiary company first becomes entitled to offset an amount mentioned in paragraph (1)(a) against the subsidiary company's company tax, whichever is later. 160AQKAE(8) Consequences for the holding company under this section.
If thissection applies, a class C franking debit arises for the holding company on 7 June 2001 or the day on which the subsidiary company first becomes entitled to offset an amount mentioned in paragraph (1)(a) against the subsidiary company's company tax, whichever is later. The amount of the franking debit is worked out using the formula:
| Available deficit/deferral tax liability × |
64
36 |
The section has effect as if it had come into operation on 4 May 1999. For that purpose:
(a) any claim for an offset made under section 160AQKA after 4 May 1999 but before the commencement of this section is taken to be a claim made under this section; and
(b) on the day on which any such claim under section 160AQKA was made, the Commissioner is taken to have made a determination under this section that the company making the claim is entitled to an offset of the amount claimed.
Where a company makes a claim for an offset (whether in a return of income of a year of income or otherwise), the Commissioner may, for the purpose of determining whether an offset is allowable to the company and, if the Commissioner determines that an offset is allowable, for the purpose of determining the amount of the offset, accept, in whole or in part, any statement in the claim that is relevant to the determination.
160AQKB(2) [Question relevant to determination]Despite subsection (1), where, in a document furnished with a claim for an offset, a question is raised that is relevant to the determination of the claim, the Commissioner must give attention to that question.
160AQKB(3) [Determination of objection]In deciding whether a determination of a claim for an offset is correct, any determination, opinion or judgment of the Commissioner made, held or formed in connection with the consideration of an objection against the determination of the claim is deemed to have been made, held or formed when the determination of the offset was made.
The Commissioner may at any time amend an offset determination in such manner as the Commissioner thinks necessary.
160AQL(2) [Amended determination]For the purposes of this Act, an amended determination shall be treated like a determination.
The Commissioner shall serve notice in writing of an offset determination on the company to which it relates.
160AQM(2) [Inclusion in assessment]The notice may be included in a notice of assessment.
An offset determination does not form part of an assessment.
The production of:
(a) a notice of an offset determination; or
(b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of an offset determination;
is conclusive evidence of:
(c) the due making of the determination; and
(d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct.
If the company to which an offset determination relates is dissatisfied with the offset determination, it may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
Where, because of an amendment of an offset determination, the amount, or the sum of the amounts, applied by the Commissioner as an offset to which a company is entitled exceeds the amount of the offset to which the company is entitled, the Commissioner may recover the amount of the excess as if it were company tax due and payable by the company.
Section 172 applies for the purposes of this Subdivision as if a reference in that section to an assessment included a reference to an offset determination.
This section has effect subject to section 160AQTA .
(a) a class A franked dividend is paid in a year of income to a shareholder in a company; and
(b) the shareholder is:
(i) a natural person who is a resident at the time of payment of the dividend;
(ii) a trustee;
(iii) a partnership; or
(iv) a registered organization; and
(ba) the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and
(c) the dividend is not exempt income of the shareholder; and
(d) the dividend was not paid as part of a dividend stripping operation;
the assessable income of the shareholder of the year of income shall include the amount calculated in accordance with the formula:
where:
CR is the applicable general company tax rate; and
FA is the class A franked amount of the dividend.
(a) a class B franked dividend is paid in a year of income to a shareholder in a company; and
(b) the shareholder is:
(i) a natural person who is a resident at the time of payment of the dividend; or
(ii) a trustee; or
(iii) a partnership; or
(iv) a registered organization; and
(c) the dividend is not exempt income of the shareholder; and
(d) the dividend was not paid as part of a dividend stripping operation;
the assessable income of the shareholder of the year of income includes the amount worked out using the formula:
where:
``Franked amount'' means the class B franked amount of the dividend;
``Company tax rate'' means the applicable general company tax rate.
(a) a class C franked dividend is paid in a year of income to a shareholder in a company; and
(b) the shareholder is:
(i) a natural person who is a resident at the time of payment of the dividend; or
(ii) a trustee; or
(iii) apartnership; or
(iv) a registered organisation; or
(v) an exempt institution whose exempt status is disregarded in relation to the dividend under section 160ARDAB ; and
(ba) the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and
(c) the dividend is not exempt income of the shareholder; and
(d) the dividend was not paid as part of a dividend stripping operation;
the assessable income of the shareholder of the year of income includes the amount worked out using the formula:
where:
Franked amount means the class C franked amount of the dividend.
Company tax rate means the applicable general company tax rate.
(a) a class A franked dividend is paid in a year of income to a shareholder in a company;
(b) the shareholder is a life assurance company;
(ba) the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and
(c) the dividend is not exempt income of the shareholder;
(d) the dividend was not paid as part of a dividend stripping operation; and
(e) the assets of the shareholder from which the dividend was derived were included in insurance funds of the shareholder at any time during the period commencing at the beginning of the year of income of the shareholder in which the dividend was paid and ending at the time the dividend was paid;
the assessable income of the shareholder of the year of income shall include the amount calculated in accordance with the formula:
where:
CR is the applicable general company tax rate; and
FA is the class A franked amount of the dividend.
(a) a class B franked dividend is paid in a year of income to a shareholder in a company; and
(b) the shareholder is a life assurance company; and
(c) the dividend is not exempt income of the shareholder; and
(d) the dividend was not paid as part of a dividend stripping operation; and
(e) the assets of the shareholder from which the dividend was derived were included in insurance funds of the shareholder at any time during the period:
(i) starting at the beginning of the year of income of the shareholder in which the dividend was paid; and
(ii) ending at the time the dividend was paid;
the assessable income of the shareholder of the year of income includes the amount worked out using the formula:
where:
``Franked amount'' means the class B franked amount of the dividend;
``Company tax rate'' means the applicable general company tax rate.
(a) a shareholder in a company is a life assurance company; and
(b) a class C franked dividend is paid by the company to the life assurance company in a year of income; and
(c) the life assurance company is a qualified person in relation to the dividend for the purposes of Division 1A; and
(d) the dividend is not exempt income of the life assurance company; and
(e) the dividend was not paid as part of a dividend stripping operation; and
(f) at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
the assets of the life assurance company from which the dividend was derived were both:
(ii) ends at the time when the dividend was paid;
(iii) included in the insurance funds of the life assurance company; and
(iv) not held on behalf of the life assurance company's shareholders;
the assessable income of the life assurance company of the year of income includes the amount worked out using the formula:
| Franked amount × |
Company tax rate
1 - Company tax rate |
where:
company tax rate
means the applicable general company tax rate.
franked amount
means the class C franked amount of the dividend.
If a determination is made under paragraph 160AQCBA(3)(b) in respect of the dividend, an amount is not included under this section in the assessable income of a shareholder.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of the dividend, an amount is not included under this section in the assessable income of a shareholder.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of the dividend, the amount that would otherwise be included under this section in the assessable income of a shareholder is reduced by the same proportion as that part of the dividend bears to the whole of the dividend.
An amount included in the assessable income of a shareholder under this section in relation to a dividend is in addition to any other amount included in that assessable income in relation to the dividend under any other provision of this Act.
160AQT(3) [Amount not attributable to franked dividend]For the purposes of this Act, an amount shall not be taken to be directly or indirectly attributable to, or to be in respect of, a franked dividend only because it is directly or indirectly attributable to, or is in respect of, an amount included in assessable income under this section.
160AQT(4) [Matters to be disregarded]In determining for the purposes of this section whether a dividend is exempt income, disregard:
(a) sections 282B , 283 and 297B of this Act; and
(b) paragraphs 320-37(1)(a) and (d) of the Income Tax Assessment Act 1997 .
Disregard section 50-1 of the Income Tax Assessment Act 1997 in determining, for the purposes of this section, whether a dividend is exempt income of an exempt institution whose exempt status is disregarded in relation to the dividend under section 160ARDAB .
For the purposes of this section, if:
(a) because of subsection 124ZM(3) , subsection 124ZM(2) does not exempt the franked amount of a dividend paid by a company to a shareholder; and
(b) the dividend is not otherwise exempt income of the shareholder;
the dividend is taken not to be exempt income of the shareholder.
For the purposes of this section, if:
(a) because of subsection 124ZM(3) , an amount of a dividend paid to a shareholder by a company is not exempt income of the shareholder under paragraph 124ZM(1C)(b) or 124ZM (1D)(b); and
(b) the dividend is not otherwise exempt income of the shareholder;
then:
(c) the dividend is taken not to be exempt income of the shareholder; and
(d) subsections (1AB) and (1C) apply to the dividend as if references to the franked amount of the dividend in those subsections were references to the remaining franked amount as defined in section 124ZM .
Subject to subsections (2) and (5), section 160AQT does not apply in relation to a class A franked dividend, a class B franked dividend, or a class C franked dividend, paid to a shareholder by an exempting company.
160AQTA(2) Exception where shareholder is life assurance company holding all the shares or substantially bearing the risks associated with holding the shares.Subsection (1) does not preclude section 160AQT from applying in relation to a franked dividend paid by an exempting company to a life assurance company (other than a life assurance company acting as a trustee) in respect of accountable shares held by the life assurance company in the exempting company if:
(a) the exempting company and the life assurance company are members of the same effectively wholly-owned group of companies; or
(b) the life assurance company holds more than 5% of the shares in the exempting company (other than finance shares or dividend access shares within the meaning of section 160APHBC or shares that do not carry the right to receive dividends) and it would be reasonable to conclude that the risks involved in, and the opportunities resulting from, holding those shares are substantially borne by, or substantially accrue to, the life assurance company. 160AQTA(3) Matters to be taken into account in determining whether life assurance company bears the risks associated with the holding of shares.
In deciding whether it would be reasonable to conclude as mentioned in paragraph (2)(b):
(a) regard is to be had to any arrangement in respect of shares (including unissued shares) in the exempting company held by persons who are not, and are not associates of, the life assurance company (including any derivatives held or issued in connection with those shares); but
(b) no regard is to be had to risks involved in the ownership of shares in the exempting company that are substantially borne by any person in the person's capacity as a secured creditor. 160AQTA(4) Exception for grossing-up limited to grossed-up amount attributable to credits arising while life assurance company held shares.
Subsection (2) does not apply to so much of the franked amount of a franked dividend paid by an exempting company to a life assurance company as related to franking credits of the exempting company that arose at a time before the life assurance company acquired the shares in respect of which the dividend was paid.
160AQTA(5) Exception where shares held under employee share scheme.Subsection (1) does not preclude section 160AQT from applying in relation to a franked dividend paid by an exempting company in respect of a share held by a person who:
(a) was an employee of the exempting company, or of a company that was a subsidiary of the exempting company, at the time when the dividend was paid; and
(b) acquired the share under an eligible employee share scheme; and
(c) did not hold the share as a trustee.
(a) a class A exempted dividend, or a class C exempted dividend, is paid in a year of income to a shareholder in a former exempting company in respect of accountable shares held by the shareholder in the former exempting company; and
(b) at both of the following times:
(i) the time when the dividend was paid;
the shareholder was a life assurance company;
(ii) the time immediately before the former exempting company ceased to be an exempting company;
subsection 160AQT(1A) or (1C) applies as if the dividend were a class A franked dividend or a class C franked dividend and the class A exempted amount or class C exempted amount were a class A franked amount or a class C franked amount, as the case may be.
160AQTB(2) Grossing-up limited to grossed-up amount attributable to credits arising while life assurance company held shares.Subsection (1) does not apply to so much of the exempted amount of an exempted dividend paid by a former exempting company to a life assurance company as related to exempting credits of the former exempting company that arose at a time before the life assurance company acquired the shares in respect of which the dividend was paid.
160AQTB(3) Grossed-up amount to be included in assessable income of holder of shares under employee share scheme.If a class A exempted dividend, or a class C exempted dividend, is paid in a year of income in respect of a share in a former exempting company held by a person who:
(a) was an employee of the former exempting company, or of a company that was a subsidiary of the former exempting company, at the time when the dividend was paid; and
(b) acquired the share under an eligible employee share scheme;
subsection 160AQT(1) or (1AB) applies as if the dividend were a class A franked dividend or a class C franked dividend and the class A exempted amount or class C exempted amount were a class A franked amount or a class C franked amount, as the case may be.
160AQTB(4) Certain natural persons entitled to franking rebate in respect of exempted dividend.(a) a company other than a former exempting company became an exempting company; and
(b) immediately before the company became an exempting company all the accountable shares and accountable interests in the company were beneficially owned (whether directly or indirectly) by natural persons who were residents; and
(c) the company became an exempting company because some or all of the persons mentioned in paragraph (b) became non-residents; and
(d) the company becomes a former exempting company because all of the persons mentioned in paragraph (b) are or have become residents; and
(e) an amount attributable to a class A exempted dividend or a class C exempted dividend paid by the company is included in the assessable income of such a person; and
(f) all the accountable shares and accountable interests in the company were, throughout the period beginning when the company became an exempting company and ending when the amount was received by the person, beneficially owned (directly or indirectly) by persons mentioned in paragraph (b);
subsection 160AQT(1) or (1AB) , or section 160AQX or 160AQZ , apply in relation to the person as if the amount were a class A franked dividend or a class C franked dividend, or a class A flow-on franking amount or a class C flow-on franking amount in relation to the relevant trust amount or partnership amount, and the class A exempted amount or class C exempted amount were a class A franked amount or a class C franked amount, as the case requires.
The question whether a company is a subsidiary of another company for the purposes of sections 160AQTA and 160AQTB is to be determined in the same way as the question whether a corporation is a subsidiary of another corporation is determined under the Corporations Act 2001 .
(a) an amount is included under section 160AQT in the assessable income of a shareholder of a year of income; and
(b) the shareholder is not:
(i) a partnership; or
(ii) a trustee (other than the trustee of an eligible entity within the meaning of Part IX or of an exempt institution whose exempt status is disregarded in relation to the dividend under section 160ARDAB );
the shareholder is entitled to a rebate of tax in the shareholder's assessment in respect of income of the year of income equal to the amount so included in the shareholder's assessable income.
For the purposes of subsection (1), in determining the amount included under section 160AQT in the assessable income of a shareholder, disregard:
(a) sections 282B , 283 and 297B of this Act; and
(b) paragraphs 320-37(1)(a) and (d) of the Income Tax Assessment Act 1997 .
Disregard section 50-1 of the Income Tax Assessment Act 1997 in determining, for the purposes of subsection (1), the amount included under section 160AQT in the assessable income of an exempt institution whose exempt status is disregarded in relation to the dividend concerned under section 160ARDAB .
(a) a franked dividend or exempted dividend is paid to a shareholder in a company (in this section called the ``first shareholder'' ) in respect of a share in the company (including a dividend that is taken to be paid as a result of one or more previous applications of this section); and
(b) either of the following conditions is satisfied:
(i) at the dividend closing time, the first shareholder was under an obligation to transfer the share to another taxpayer (in this section called the ``transferee'' ) under a contract for the sale of the share where:
(A) the contract is of the kind known as a ``cum-dividend'' contract; and
(B) the contract was entered into in the ordinary course of trading on a stock exchange in Australia or elsewhere;
(ii) all of the following conditions are satisfied:
(A) at the time the dividend was paid, the first shareholder was under an obligation to pay the dividend to the lender under a securities lending arrangement;
(B) the obligation was incurred in the first shareholder's capacity as the borrower under the securities lending arrangement;then, for the purposes of Subdivision D of Division 2 of Part III , of section 124ZM and of this Part (other than Divisions 4 and 5 and sections 160AQCB and 160ARX ), the dividend is taken to be a dividend paid to the transferee or the lender, as the case may be, as a shareholder in the company instead of to the first shareholder.
(C) the dividend closing time occurred during the borrowing period;
For the purposes of this section, if dividends are paid to those taxpayers who were shareholders as at a particular time at or before the payment, that time is the dividend closing time in relation to those dividends.
If:
(a) section 160AQUA applies in relation to a dividend covered by subparagraph 160AQUA(1)(b)(i) (whether the application is the sole or final application or an earlier application of that section); and
(b) a securities dealer has acted for a particular party to the contract concerned;
the securities dealer must, as soon as practicable after the payment of the dividend, give to the other party to the contract a statement in the approved form setting out such information in relation to the dividend as is required by the approved form to be set out.
If:
(a) section 160AQUA applies in relation to a dividend covered by subparagraph 160AQUA(1)(b)(i) (whether the application is the sole or final application or an earlier application of that section); and
(b) a particular party to the contract concerned has not had a securities dealer acting for him or her;
the party must, as soon as practicable after the payment of the dividend, give to the other party to the contract a statement in the approved form setting out such information in relation to the dividend as is required by the approved form to be set out.
If section 160AQUA applies in relation to a dividend covered by subparagraph 160AQUA(1)(b)(ii) (whether the application is the sole or final application or an earlier application of that section), the borrower must, as soon as practicable after the payment of the dividend, give to the lender a statement in the approved form setting out such information in relation to the dividend as is required by the approved form to be set out.
This Division applies separately in relation to each franked dividend paid to a shareholder being a trustee or partnership.
For the purposes of this Act, a section 160AQT amount shall be included in any relevant trust amounts and partnership amounts in the same proportions as persons are liable to be assessed, or would, but for section 128D of this Act or section 50-1 of the Income Tax Assessment Act 1997 , be liable to be assessed, directly or indirectly, in respect of the franked dividend to which the section 160AQT amount relates.
A reference in this section to a section 160AQT amount is a reference to:
(a) an amount included under section 160AQT in the assessable income of a trustee or partnership; or
(b) an amount attributable to an amount so included.
In determining a taxpayer's entitlement to a rebate under section 160AQYA or 160AQZA , assume that:
(a) sections 282B , 283 and 297B of this Act; and
(b) paragraphs 320-37(1)(a) and (d) of the Income Tax Assessment Act 1997 ;
had not been enacted.
In determining the entitlement to a rebate under section 160AQX of an exempt institution whose exempt status is disregarded in relation to the trust amount concerned under section 160ARDAB , assume that section 50-1 of the Income Tax Assessment Act 1997 had not been enacted.
(a) a trust amount is included in the assessable income of a taxpayer of a year of income;
(b) the taxpayer is:
(i) a natural person other than a trustee; or
(ii) a registered organisation (other than a trustee); or
(iii) an exempt institution whose exempt status is disregarded in relation to the trust amount under section 160ARDAB ; and
(c) there are one or more of the following:
(i) a class A flow-on franking amount in relation to the trust amount;
(ii) a class B flow-on franking amount in relation to the trust amount;
(iii) a class C flow-on franking amount in relation to the trust amount; and
(ca) the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to whichever of the following is applicable:
(d) if only subparagraph (c)(i) applies - the class A potential rebate amount in relation to the trust amount;
(e) if only subparagraph (c)(ii) applies - the class B potential rebate amount in relation to the trust amount;
(ea) if only subparagraph (c)(iii) applies - the class C potential rebate amount in relation to the trust amount;
(f) if subparagraphs (c)(i) and (ii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount;
(g) if subparagraphs (c)(i) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(h) if subparagraphs (c)(ii) and (iii) apply - the sum of:
(i) the class B potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(i) if subparagraphs (c)(i), (ii) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount; and
(iii) the class C potential rebate amount in relation to the trust amount.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution that is represented by the trust amount, the taxpayer is not entitled to a rebate of tax under subsection (1).
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution that is represented by the trust amount, the rebate of tax to which the taxpayer would otherwise be entitled under subsection (1) is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (4):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a trustee is liable to be assessed under section 98 (other than subsection 98(3) ), or under section 99 or 99A , on a trust amount; and
(b) there are one or more of the following:
(i) a class A flow-on franking amount in relation to the trust amount;
(ii) a class B flow-on franking amount in relation to the trust amount;
(iii) a class C flow-on franking amount in relation to the trust amount; and
(ba) the trustee is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
the trustee is entitled to a rebate in that assessment of an amount equal to whichever of the following is applicable:
(c) if only subparagraph (b)(i) applies - the class A potential rebate amount in relation to the trust amount;
(d) if only subparagraph (b)(ii) applies - the class B potential rebate amount in relation to the trust amount;
(da) if only subparagraph (b)(iii) applies - the class C potential rebate amount in relation to the trust amount;
(e) if subparagraphs (b)(i) and (ii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount;
(f) if subparagraphs (b)(i) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(g) if subparagraphs (b)(ii) and (iii) apply - the sum of:
(i) the class B potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(h) if subparagraphs (b)(i), (ii) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount; and
(iii) the class C potential rebate amount in relation to the trust amount.
If a determination is made under paragraph 160AQCBA(3)(b) in respect of a dividend or distribution that is represented by the trust amount, the trustee is not entitled to a rebate of tax under subsection (1).
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution that is represented by the trust amount, the trustee is not entitled to a rebate of tax under subsection (1).
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution that is represented by the trust amount, the rebate of tax to which the trustee would otherwise be entitled under subsection (1) is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A trustee is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (5):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a trust amount is included in the assessable income of a taxpayer of a year of income;
(b) the taxpayer is the trustee of an eligible entity within the meaning of Part IX; and
(c) there are one or more of the following:
(i) a class A flow-on franking amount in relation to the trust amount;
(ii) a class B flow-on franking amount in relation to the trust amount;
(iii) a class C flow-on franking amount in relation to the trust amount; and
(ca) the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to whichever of the following is applicable:
(d) if only subparagraph (c)(i) applies - the class A potential rebate amount in relation to the trust amount;
(e) if only subparagraph (c)(ii) applies - the class B potential rebate amount in relation to the trust amount;
(ea) if only subparagraph (c)(iii) applies - the class C potential rebate amount in relation to the trust amount;
(f) if subparagraphs (c)(i) and (ii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount;
(g) if subparagraphs (c)(i) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(h) if subparagraphs (c)(ii) and (iii) apply - the sum of:
(i) the class B potential rebate amount in relation to the trust amount; and
(ii) the class C potential rebate amount in relation to the trust amount;
(i) if subparagraphs (c)(i), (ii) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the trust amount; and
(ii) the class B potential rebate amount in relation to the trust amount; and
(iii) the class C potential rebate amount in relation to the trust amount.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (1A):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income;
(b) the taxpayer is a trustee of an eligible entity within the meaning of Part IX; and
(c) there are one or more of the following:
(i) a class A flow-on franking amount in relation to the partnership amount;
(ii) a class B flow-on franking amount in relation to the partnership amount;
(iii) a class C flow-on franking amount in relation to the partnership amount;
(ca) the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to whichever of the following is applicable:
(d) if only subparagraph (c)(i) applies - the class A potential rebate amount in relation to the partnership amount;
(e) if only subparagraph (c)(ii) applies - the class B potential rebate amount in relation to the partnership amount;
(ea) if only subparagraph (c)(iii) applies - the class C potential rebate amount in relation to the partnership amount;
(f) if subparagraphs (c)(i) and (ii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class B potential rebate amount in relation to the partnership amount;
(g) if subparagraphs (c)(i) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class C potential rebate amount in relation to the partnership amount;
(h) if subparagraphs (c)(ii) and (iii) apply - the sum of:
(i) the class B potential rebate amount in relation to the partnership amount; and
(ii) the class C potential rebate amount in relation to the partnership amount;
(i) if subparagraphs (c)(i), (ii) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class B potential rebate amount in relation to the partnership amount; and
(iii) the class C potential rebate amount in relation to the partnership amount.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution that is represented by the trust amount or partnership amount, the taxpayer is not entitled to a rebate of tax under this section.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution that is represented by the trust amount or partnership amount, the rebate of tax to which the taxpayer would otherwise be entitled under this section is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (5):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated;and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income;
(b) the taxpayer is:
(i) a natural person other than a trustee; or
(ii) a registered organization other than a trustee; and
(c) there are one or more of the following:
(i) a class A flow-on franking amount in relation to the partnership amount;
(ii) a class B flow-on franking amount in relation to the partnership amount;
(iii) a class C flow-on franking amount in relation to the partnership amount; and
(ca) the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to whichever of the following is applicable:
(d) if only subparagraph (c)(i) applies - the class A potential rebate amount in relation to the partnership amount;
(e) if only subparagraph (c)(ii) applies - the class B potential rebate amount in relation to the partnership amount;
(ea) if only subparagraph (c)(iii) applies - the class C potential rebate amount in relation to the partnership amount;
(f) if subparagraphs (c)(i) and (ii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class B potential rebate amount in relation to the partnership amount;
(g) if subparagraphs (c)(i) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class C potential rebate amount in relation to the partnership amount;
(h) if subparagraphs (c)(ii) and (iii) apply - the sum of:
(i) the class B potential rebate amount in relation to the partnership amount; and
(ii) the class C potential rebate amount in relation to the partnership amount;
(i) if subparagraphs (c)(i), (ii) and (iii) apply - the sum of:
(i) the class A potential rebate amount in relation to the partnership amount; and
(ii) the class B potential rebate amount in relation to the partnership amount; and
(iii) the class C potential rebate amount in relation to the partnership amount.
If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution that is represented by the partnership amount, the taxpayer is not entitled to a rebate of tax under this section.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution that is represented by the partnership amount, the rebate of tax to which the taxpayer would otherwise be entitled under this section is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (4):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a class A franking credit of a taxpayer arises or, but for section 160APKA would arise, under subsection 160APQ(1) in respect of:
(i) a trust amount or partnership amount that is included in; or
the assessable income of the taxpayer of a year of income; and
(ii) a partnership amount that is allowed as a deduction from;
(b) subsection 160APQ(3) applies or, but for section 160APKA , it would apply;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to the class A potential rebate amount in relation to the trust amount or partnership amount.
(a) a class B franking credit of a taxpayer arises or, but for section 160APKA would arise, under subsection 160APQ(1A) in respect of:
(i) a trust amount or partnership amount that is included in; or
the assessable income of the taxpayer of a year of income; and
(ii) a partnership amount that is allowed as a deduction from;
(b) subsection 160APQ(3) applies or, but for section 160APKA , it would apply;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to the class B potential rebate amount in relation to the trust amount or partnership amount.
(a) a class C franking credit of a taxpayer arises or, but for section 160APKA would arise, under subsection 160APQ(2) in respect of:
(i) a trust amount or partnership amount that is included in; or
the assessable income of the taxpayer of a year of income; and
(ii) a partnership amount that is allowed as a deduction from;
(b) subsection 160APQ(3) applies or, but for section 160APKA , it would apply;
the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of the year of income of an amount equal to the class C potential rebate amount in relation to the trust amount or partnership amount.
160AQZA(4) [No rebate]If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution that is represented by the trust amount or partnership amount, the taxpayer is not entitled to a rebate of tax under this section.
If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution that is represented by the trust amount or partnership amount, the rebate of tax to which the taxpayer would otherwise be entitled under this section is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.
A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
In subsection (6):
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid
: a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(a) a class A franked dividend or a class C franked dividend (the relevant dividend ) is paid by an exempting company to a shareholder that is a trustee of a trust or is a partnership; and
(b) at the time when the relevant dividend was paid, a person who held an interest in the trust or partnership was a life assurance company, an exempting company, or a person who acquired the interest under an eligible employee share scheme, being a company or person in respect of whom or in respect of which a franking credit or franking rebate would have arisen if the relevant dividend had been paid to the company or person; and
(c) an amount attributable to the relevant dividend:
(i) is included in the assessable income of the holder of the interest; or
(ii) would have been included in the assessable income of the holder of the interest if paragraphs 320-37(1)(a) and (d) of the Income Tax Assessment Act 1997 had not been enacted;
then, for the purposes of the application of this Part in relation to the holder of the interest:
(d) the part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken:
(i) to have been a class A franked dividend or a class C franked dividend, as the case may be, paid to the holder of the interest; and
(ii) to have been franked to the same extent as the relevant dividend; and
(e) the holder of the interest is taken to have been the holder of the share in respect of which the relevant dividend was paid.
A person is taken to hold an interest in a trust if:
(a) the person is a beneficiary under the trust; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the trustee. 160AQZB(3) Holding an interest in a partnership.
A person is taken to hold an interest in a partnership if:
(a) the person is a partner in the partnership; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the partnership. 160AQZB(4) Calculation of part of dividend to which amount received by holder of interest is attributable.
For the purposes of subsection (1), the part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken to be the amount worked out using the formula:
| Amount of dividend × |
Share of income
Total income |
where:
amount of dividend
means the amount of the relevant dividend paid to the trustee or partnership.
share of income
means the share of the income of the trust, or of the income of the partnership, of the year of income to which the holder of the interest is entitled.
total income
means the income of the trust or partnership of the year of income.
(a) a class A exempted dividend or a class C exempted dividend (the relevant dividend ) is paid by a former exempting company to a shareholder that is a trustee of a trust or is a partnership; and
(b) at the time when the relevant dividend was paid, a person who held an interest in the trust or partnership was a life assurance company, an exempting company, a former exempting company, or a person who acquired the interest under an eligible employee share scheme, being a company or person in respect of which or in respect of whom a franking credit, franking rebate or exempting credit would have arisen if the relevant dividend had been paid to the company or person; and
(c) an amount attributable to the relevant dividend:
(i) is included in the assessable income of the holder of the interest; or
(ii) would have been included in the assessable income of the holder of the interest if paragraphs 320-37(1)(a) and (d) of the Income Tax Assessment Act 1997 had not been enacted;
then, for the purposes of the application of this Part in relation to the holder of the interest:
(d) the part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken:
(i) to have been a class A exempted dividend or a class C exempted dividend, as the case may be, paid to the holder of the interest; and
(ii) to have been exempted to the same extent as the relevant dividend; and
(e) the holder of the interest is taken to have been the holder of the share in respect of which the relevant dividend was paid.
A person is taken to hold an interest in a trust if:
(a) the person is a beneficiary under the trust; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the trustee. 160AQZC(3) Holding an interest in a partnership.
A person is taken to hold an interest in a partnership if:
(a) the person is a partner in the partnership; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the partnership. 160AQZC(4) Calculation of part of dividend to which amount received by holder of interest is attributable.
For the purposes of subsection (1), the part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken to be the amount worked out using the formula:
| Amount of dividend × |
Share of income
Total income |
where:
amount of dividend
means the amount of the relevant dividend paid to the trustee or partnership.
share of income
means the share of the income of the trust, or of the income of the partnership, of the year of income to which the holder of the interest is entitled.
total income
means the income of the trust or partnership of the year of income.
This Subdivision applies in relation to a year of income to a taxpayer (the electing taxpayer ) who makes an election under section 160APHR in relation to the year of income.
(a) any dividends are paid on shares during the year of income; and
(b) the electing taxpayer is a company that held the shares or had interests in the shares; and
(c) the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and
(d) the election under section 160APHR related to the shares or interests; and
(e) the sum of the franking credits to which the electing taxpayer is entitled under this Part in respect of all those dividends exceeds the ceiling amount in relation to the fund in relation to the year of income;
there arises, at the end of the year of income, a franking debit of the company equal to the excess.
160AQZE(2) [Sum of credits]If the electing taxpayer is entitled to both class A franking credits and class C franking credits under this Part in respect of any of the dividends referred to in subsection (1), the sum of the franking credits to which the taxpayer is entitled under this Part in respect of all the dividends referred to in that subsection is the sum of:
(a) the class C franking credits in respect of any of those dividends; and
(b) the amount worked out by using the formula:
| The class A franking
credits in respect of any of those dividends |
× |
39
61 |
× |
64
36 |
The ceiling amount , in relation to the fund in relation to the year of income, is the notional total credit amount in relation to the fund in relation to the year of income increased by:
(a) if paragraph (b) does not apply - 20%; or
(b) if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined - that percentage. 160AQZE(4) [Notional total credit amount]
The notional total credit amount , in relation to the fund in relation to the year of income, is:
(a) subject to paragraph (b), an amount equal to the sum of the franking credits to which a taxpayer (the notional taxpayer ) of the same class or kind as the electing taxpayer would be entitled under this Part in respect of dividends on shares in the benchmark portfolio of shares that applies in respect of the fund (being shares that become ex dividend during the year of income) if:
(i) those dividends were paid to the notional taxpayer in the year of income; and
(ii) the notional taxpayer were a qualified person under section 160APHO in relation to those dividends; or
(b) if the regulations provide another method of calculating notional total credit amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included - the amount calculated in relation to the fund in accordance with that method. 160AQZE(5) [Calculation - first acquisition]
If the first acquisition of shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund occurred during the year of income, the notional total credit amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income before the acquisition occurred.
160AQZE(6) [Calculation - all shares and interests disposed of]If all the shares and interests in shares that were managed by or on behalf of the electing taxpayer as or in a particular discrete fund are disposed of during the year of income, the notional total credit amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income after the last disposal of any of the shares or interests occurred.
160AQZE(7) [Regulations]The regulations may determine what constitutes a kind of taxpayer or class of taxpayers for the purposes of this section.
(a) any dividends are paid on shares during the year of income; and
(b) the electing taxpayer held the shares or had interests in the shares; and
(c) the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and
(d) the election under section 160APHR related to the shares or interests;
the sum of the rebates of tax to which the electing taxpayer is entitled under this Part or Subdivision D of Division 2 of Part III in respect of all those dividends is not to exceed the ceiling amount in relation to the fund in relation to the year of income.
160AQZF(2) [``ceiling amount'']The ceiling amount , in relation to the fund in relation to the year of income, is the notional total rebate amount in relation to the fund in relation to the year of income increased by:
(a) if paragraph (b) does not apply - 20%; or
(b) if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined - that percentage. 160AQZF(3) [``notional total rebate amount'']
The notional total rebate amount , in relation to the fund in relation to the year of income, is:
(a) subject to paragraph (b), an amount equal to the sum of the rebates of tax to which a taxpayer (the notional taxpayer ) of the same class or kind as the electing taxpayer would be entitled under this Part in respect of dividends on shares in the benchmark portfolio of shares that applies in respect of the fund (being shares that become ex dividend during the year of income) if:
(i) those dividends were paid to the notional taxpayer in the year of income; and
(ii) the notional taxpayer were a qualified person under section 160APHO in relation to the dividends; or
(b) if the regulations provide another method of calculating notional total rebate amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included - the amount calculated in relation to the fund in accordance with that method. 160AQZF(4) [Calculation - first acquisition]
If the first acquisition of shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund occurred during the year of income, the notional total rebate amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income before the acquisition occurred.
160AQZF(5) [Calculation - all shares and interests disposed of]If all the shares and interests in shares that were managed by or on behalf of the electing taxpayer as or in a particular discrete fund are disposed of during the year of income, the notional total rebate amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income after the last disposal of any of the shares or interests occurred.
160AQZF(6) [Regulations]The regulations may determine what constitutes a kind of taxpayer or class of taxpayers for the purposes of this section.
160AQZF(7) [When excess allowable as a deduction]If the sum of the rebates of tax to which the electing taxpayer is entitled under this Part in respect of dividends paid during the year of income exceeds the ceiling amount in relation to the fund in relation to the year of income, the excess is allowable as a deduction from the electing taxpayer's assessable income of the year of income.
(a) any dividends are paid on shares during the year of income; and
(b) the electing taxpayer is a taxpayer mentioned in paragraph 160APHR(1)(a), (b), (j) or (k) who held the shares or had interests in the shares; and
(c) the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and
(d) the election under section 160APHR related to the shares or interests;
the sum of the amounts represented by the letters PR and EPR in the formulas in the definition of potential rebate amount in section 160APA in relation to the electing taxpayer in respect of all those dividends is not to exceed the ceiling amount in relation to the fund in relation to the year of income.
160AQZG(2) [``ceiling amount'']The ceiling amount , in relation to the fund in relation to the year of income, is the notional total rebate amount in relation to the fund in relation to the year of income increased by:
(a) if paragraph (b) does not apply - 20%; or
(b) if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined - that percentage. 160AQZG(3) [``notional total rebate amount'']
The notional total rebate amount , in relation to the fund in relation to the year of income, is:
(a) subject to paragraph (b), an amount equal to the sum of the rebates of tax to which a taxpayer (the notional taxpayer ) who is a natural person and a resident of Australia would be entitled under this Part in respect of dividends on shares in the benchmark portfolio of shares that applies in respect of the fund (being shares that become ex dividend during the year of income) if:
(i) those dividends were paid to the notional taxpayer in the year of income; and
(ii) the notional taxpayer were a qualified person under section 160APHO in relation to those dividends; or
(b) if the regulations provide another method of calculating notional total rebate amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included - the amount calculated in relation to the fund in accordance with that method. 160AQZG(4) [Calculation - first acquisition]
If the first acquisition of shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund occurred during the year of income, the notional total rebate amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income before the acquisition occurred.
160AQZG(5) [Calculation - all shares and interests disposed of]If all the shares and interests in shares that were managed by or on behalf of the electing taxpayer as or in a particular discrete fund are disposed of during the year of income, the notional total rebate amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income after the last disposal of any of the shares or interests occurred.
160AQZG(6) [Excess is allowable deduction]If the sum of the amounts referred to in subsection (1) in relation to the electing taxpayer in respect of dividends paid during the year of income exceeds the ceiling amount referred to in that subsection in relation to the year of income, the excess is allowable as a deduction from the electing taxpayer's assessable income of the year of income.
The benchmark portfolio of shares that is applicable in respect of a fund managed by or on behalf of a taxpayer is the portfolio of the shares and other securities used to calculate:
(a) the All Ordinaries Index published by the Australian Stock Exchange Limited; or
(b) if the regulations prescribe another index in relation to a class of taxpayers in which the taxpayer is included - the other index;
being a portfolio whose value is equal to the net equity exposure of the fund for the year of income.
160AQZH(2) [``net equity exposure'']Thenet equity exposure of a fund for the year of income is the average of the values calculated for each relevant week during the year of income of the long and short positions that the fund has in such of the shares, or in interests in such of the shares, included in the fund as:
(a) are shares:
(i) in companies that are residents of Australia; and
(ii) that are included in the relevant index; or
(b) if the relevant index is the index referred to in paragraph (1)(a) - are ordinary shares:
(i) in companies that are residents of Australia; and
160AQZH(3) [Value of position in share or interest]
(ii) that are listed for quotation in the official list of Australian Stock Exchange Limited.
The value of a position in a share, or a position in an interest in a share, is calculated by multiplying the value of the share or interest by the delta of the position in the share or interest.
160AQZH(4) [Calculation of values]The values calculated for each relevant week as mentioned in subsection (2) are to be calculated on the same day each week (being the day chosen for the first calculation) or, if another basis for calculating those values is prescribed by the regulations, are to be calculated on that other basis.
160AQZH(5) [Relevant week]A relevant week referred to in subsection (2) is each week during the year of income other than:
(a) if the first acquisition of shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund occurred during the year of income - a week occurring before the week in which the acquisition occurred; and
(b) if all the shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund were disposed of during the year of income - a week occurring after the week in which the last disposal of shares or interests occurred.
(Repealed by No 89 of 2000)
(Repealed by No 89 of 2000)
(Repealed by No 89 of 2000)
(a) a trust amount is included in the assessable income of a company of a year of income; and
(b) a class A franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the trust amount; and
(c) subsection 160APQ(3) does not apply;
an amount equal to so much of the class A potential rebate amount in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a trust amount is included in the assessable income of a company of a year of income; and
(b) a class B franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the trust amount; and
(c) subsection 160APQ(3) does not apply;
an amount equal to so much of the class B potential rebate amount in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a trust amount is included in the assessable income of a company of a year of income; and
(b) a class C franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the trust amount; and
(c) subsection 160APQ(3) does not apply;
an amount equal to so much of the class C potential rebate amount in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a company of a year of income; and
(b) a class A franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the partnership amount; and
(c) subsection 160APQ(3) does not apply;
the class A potential rebate amount in relation to the partnership amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a company of a year of income; and
(b) a class B franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the partnership amount; and
(c) subsection 160APQ(3) does not apply;
the class B potential rebate amount in relation to the partnership amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a company of a year of income; and
(b) a class C franking credit arises, or apart from subsection 160APQ(4) would arise, under section 160APQ in relation to the partnership amount; and
(c) subsection 160APQ(3) does not apply;
the class C potential rebate amount in relation to the partnership amount is allowable as a deduction from the assessable income of the company of the year of income.
(a) a trust amount is included in a taxpayer's assessable income of a year of income; and
(b) a determination under paragraph 177EA(5)(b) is made in respect of a distribution represented by the trust amount; and
(c) except for the determination the taxpayer would be entitled to a franking rebate under section 160AQX , 160AQY , 160AQYA , 160AQZ or 160AQZA ; and
(d) no deduction has been allowed, or is allowable, from the taxpayer's assessable income of any year of income under section 160AR in respect of the trust amount;
an amount equal to so much of the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, except for the determination, would arise in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the taxpayer's assessable income of the year of income.
160ARAA(2) [Partnership amounts](a) a partnership amount is included in, or is allowable as a deduction from, a taxpayer's assessable income of a year of income; and
(b) a determination under paragraph 177EA(5)(b) is made in respect of a distribution represented by the partnership amount; and
(c) except for the determination, the taxpayer would be entitled to a franking rebate under section 160AQX , 160AQY , 160AQYA , 160AQZ or 160AQZA ; and
(d) no deduction has been allowed, or is allowable, from the taxpayer's assessable income of any year of income under section 160AR in respect of the partnership amount;
the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, except for the determination, would arise in relation to the partnership amount is allowable as a deduction from the taxpayer's assessable income of the year of income.
(a) a trust amount is included in a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not a qualified person in relation to the relevant franked dividend for the purposes of Division 1A; and
(c) no deduction has been allowed, or is allowable, from the taxpayer's assessable income of any year of income under section 160AR in respect of the trust amount;
an amount equal to so much of the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, if the taxpayer were such a qualified person, would arise in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the taxpayer's assessable income of the year of income.
160ARAB(2) [Partnership amount](a) a partnership amount is included in, or is allowable as a deduction from, a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not a qualified person in relation to the relevant franked dividend for the purposes of Division 1A; and
(c) no deduction has been allowed, or is allowable, from the taxpayer's assessable income of any year of income under section 160AR in respect of the partnership amount;
the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, if the taxpayer were such a qualified person, would arise in relation to the partnership amount is allowable as a deduction from the taxpayer's assessable income of the year of income.
(a) a trust amount is included in a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the trust amount because of subsection 160APQ(4) , 160AQX(2) , 160AQY(2) , 160AQYA(1A) or 160AQZA(4) ; and
(c) no deduction has been allowed, or is allowable, from the trustee's assessable income of any year of income under section 160AR or 160ARAB ;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the trust amount is allowable as a deduction from the trustee's assessable income of the year of income.
160ARAC(2) [Partnership amount](a) a partnership amount is included in a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the partnership amount because of subsection 160APQ(4) , 160AQYA(3) , 160AQZ(2) or 160AQZA(4) ; and
(c) no deduction has been allowed, or is allowable, from the partnership's assessable income of any year of income under section 160AR or 160ARAB ;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the partnership amount is allowable as a deduction from the partnership's assessable income of the year of income.
Where:
(a) a trust amount is included in the assessable income of a taxpayer of a year of income;
(b) the taxpayer is:
(i) a natural person; or
other than a trustee; and
(ii) a company;
(c) the trust amount would, but for section 128D , include withholding income;
there shall be allowed as a deduction from the assessable income of the taxpayer of the year of income an amount equal to the lesser of:
(d) the trust amount; and
(e) the amount that would be the potential rebate amount in relation to the trust amount if section 128D did not apply.
Where:
(a) a trustee is liable to be assessed under section 98 on a trust amount; and
(b) the trust amount would, but for section 128D , include withholding income;
the trust amount shall be reduced by so much of the amount that would be the potential rebate amount in relation to the trust amount if section 128D did not apply as does not exceed the trust amount.
(a) a trustee is liable to be assessed under subsection 98(3) on a trust amount; and
(b) there is a class A flow-on franking amount in relation to the trust amount;
the trust amount shall be reduced by so much of the class A potential rebate amount in relation to the trust amount as does not exceed the trust amount.
(a) a trustee is liable to be assessed under subsection 98(3) on a trust amount; and
(b) there is a class B flow-on franking amount in relation to the trust amount;
the trust amount is to be reduced by so much of the class B potential rebate amount in relation to the trust amount as does not exceed the trust amount.
(a) a trustee is liable to be assessed under subsection 98(3) on a trust amount; and
(b) there is a class C flow-on franking amount in relation to the trust amount;
the trust amount is to be reduced by so much of the class C potential rebate amount in relation to the trust amount as does not exceed the trust amount.
Where:
(a) a partnership amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income;
(b) the taxpayer is:
(i) a natural person; or
other than a trustee; and
(ii) a company;
(c) the partnership amount would, but for section 128D , include withholding income;
there shall be allowed as a deduction from the assessable income of the taxpayer of the year of income an amount equal to the amount that would be the potential rebate amount in relation to the partnership amount if section 128D did not apply.
In this Division:
ABN
has the meaning given by the
A New Tax System (Australian Business Number) Act 1999
.
arrangement
has the same meaning as in the
Income Tax Assessment Act 1997
.
associate
has the same meaning as in section
318
.
controller
in relation to an exempt institution, has the meaning given by subsections (2) to (6) (inclusive).
notional trust amount
in relation to an exempt institution, is an amount that would be a trust amount of the institution if section
50-1
of the
Income Tax Assessment Act 1997
had not been enacted.
related transaction
in relation to a dividend or notional trust amount, means an act, transaction or circumstance that has occurred, will occur, or may reasonably be expected to occur as part of, in connection with or as a result of:
(a) the payment or receipt of the dividend; or
(b) the arising of the entitlement to, or the distribution or receipt of, the notional trust amount; or
(c) any arrangement entered into in association with:
(i) the payment or receipt of the dividend; or
160ARDAA(2) Controller of exempt institution that is a company.
(ii) the arising of the entitlement to, or the distribution or receipt of, the notional trust amount.
An entity is a controller of an exempt institution that is a company if the entity is a controller of the company (for CGT purposes) within the meaning of section 140-20 of the Income Tax Assessment Act 1997 .
160ARDAA(3) Controller of exempt institution other than a company - basic meaning.Subject to subsections (5) and (6), an entity is a controller of an exempt institution that is not a company if:
(a) a group in relation to the entity has the power, by means of the exercise of a power of appointment or revocation or otherwise, to obtain beneficial enjoyment (directly or indirectly) of the capital or income of the institution; or
(b) a group in relation to the entity is able (directly or indirectly) to control the application of the capital or income of the institution; or
(c) a group in relation to the entity is capable, under a scheme, of gaining the beneficial enjoyment referred to in paragraph (a) or the control referred to in paragraph (b); or
(d) the institution or, if the institution is a trust, the trustee of the trust:
(i) is accustomed; or
(ii) is under an obligation; or
to act in accordance with the directions, instructions or wishes of a group in relation to the entity; or
(iii) might reasonably be expected;
(e) a group in relation to the entity is able (directly or indirectly) to remove or appoint the trustee of the trust if the institution is a trust; or
(f) a group in relation to the entity has more than a 50% stake in the income or capital of the institution; or
(g) entities in a group in relation to the entity are the only entities that, under the terms of:
(i) the constitution of the institution or the terms on which the institution is established; or
can obtain the beneficial enjoyment of the income or capital of the institution. 160ARDAA(4) [Groups]
(ii) the terms of the trust if the institution is a trust;
For the purposes of subsection (3), each of the following constitute a group in relation to an entity:
(a) the entity acting alone;
(b) an associate of the entity acting alone;
(c) the entity and one or more associates of the entity acting together;
(d) 2 or more associates of the entity acting together. 160ARDAA(5) Controller of exempt institution that is not a company - deemed absence of control.
(a) at a particular time, an entity is a controller of an exempt institution that is not a company; and
(b) the Commissioner, having regard to all relevant circumstances, considers that it is reasonable that the entity be taken not to be a controller of the institution at the particular time;
the entity is taken not to be a controller of the institution at the particular time.
160ARDAA(6) [Matters to be regarded]Without limiting paragraph (5)(b), the Commissioner may have regard under that paragraph to the identity of the beneficiaries of the trust at any time before and at any time after the entity began to be a controller of the institution if the institution is a trust.
The exempt status of an exempt institution is disregarded for the purposes of determining its entitlement to a rebate under Division 6, 6A or 7 of this Part in relation to a dividend or notional trust amount if:
(a) it satisfies subsection (2), (3), (4), (5) or (6); and
(b) section 160ARDAC (anti-avoidance provision) does not apply to the dividend or notional trust amount; and
(c) subsection (8) (chains of exempt institutions) does not apply to the notional trust amount. 160ARDAB(2) [S 50-5 and Subdiv 50-B of ITAA '97]
The institution's exempt status is disregarded if the institution:
(a) is covered by item 1.1, 1.5, 1.5A or 1.5B of the table in section 50-5 of the Income Tax Assessment Act 1997 ; and
(b) is endorsed as exempt from income tax under Subdivision 50-B of the Income Tax Assessment Act 1997 ; and
(c) is a resident.
Note:
Paragraph (c) - see subsection (7).
160ARDAB(3) [S 30-120 of ITAA '97]The institution's exempt status is disregarded if the institution:
(a) is endorsed under paragraph 30-120(a) of the Income Tax Assessment Act 1997 ; and
(b) is a resident.
Note:
Paragraph (b) - see subsection (7).
160ARDAB(4) [Subdiv 30-B of ITAA '97]The institution's exempt status is disregarded if:
(a) the institution's name is specified in a table in a section in Subdivision 30-B of the Income Tax Assessment Act 1997 ; and
(b) the institution has an ABN; and
(c) the institution is a resident.
Note:
Paragraph (c) - see subsection (7).
160ARDAB(5) [S 30-85(2) of ITAA '97]The institution's exempt status is disregarded if:
(a) a declaration by the Treasurer is in force in relation to the institution under subsection 30-85(2) of the Income Tax Assessment Act 1997 ; and
(b) the regulations do not provide that the institution's exempt status is not to be disregarded for the purposes of this Division. 160ARDAB(6) [Regulations]
The institution's exempt status is disregarded if the institution is prescribed by the regulations as an institution whose exempt status is to be disregarded for the purposes of this Division.
160ARDAB(7) [``resident'']For the purposes of this section, the institution is a resident if the institution has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia at all times during the year of income in which the dividend is paid or the entitlement to the notional trust amount arises.
160ARDAB(8) [Another exempt institution]The institution's exempt status is not disregarded in relation to a notional trust amount if the notional trust amount arises because of a dividend paid to, or a notional trust amount of, another exempt institution.
The exempt institution's exempt status is not disregarded in relation to a dividend or notional trust amount if subsection (2), (4), (5), (6), (7), (9) or (10) is satisfied. None of those subsections limits any of the others.
160ARDAC(2) [Related transaction]The institution's exempt status is not disregarded if:
(a) there is a related transaction in relation to the dividend or notional trust amount; and
(b) because of the related transaction:
(i) the amount or value of the benefit derived by the institution because of the dividend is, will be, or may reasonably be expected to be, less than the amount or value of the dividend at the time when the dividend was paid; or
(ii) the amount or value of the benefit derived by the institution because of the notional trust amount is, will be, or may reasonably be expected to be, less than the amount or value of the notional trust amount at the time when the notional trust amount arose.
The amount or value of the dividend or notional trust amount is to be increased to include the value of any franking rebate to which the institution would be entitled if this section did not apply to the dividend or notional trust amount.
160ARDAC(3) [Reasonable expenses]Subsection (2) does not apply to the dividend or notional trust amount if:
(a) the only reason why paragraph (2)(b) is satisfied is that the institution has incurred, will incur, or may reasonably be expected to incur, expenses for the purpose of obtaining the dividend or notional trust amount (and the associated franking rebate); and
(b) the expenses are, in the Commissioner's opinion, reasonable in relation to the value of the dividend or notional trust amount. 160ARDAC(4) [Liabilities]
Subject to subsection (11), the institution's exempt status is not disregarded if:
(a) there is a related transaction in relation to the dividend or notional trust amount; and
(b) because of the related transaction, the institution or another entity:
(i) makes, becomes liable to make, or may reasonably be expected to make or to become liable to make, a payment to any entity; or
(ii) transfers, becomes liable to transfer, or may reasonably be expected to transfer or to become liable to transfer, any property to any entity; or
160ARDAC(5) [Benefit etc obtained]
(iii) incurs, becomes liable to incur, or may reasonably be expected to incur or to become liable to incur, any other detriment, disadvantage, liability or obligation.
Subject to subsection (11), the institution's exempt status is not disregarded if:
(a) there is a related transaction in relation to the dividend or notional trust amount; and
(b) because of the related transaction:
(i) the company that paid the dividend or an associate of that company; or
has obtained, will obtain or may reasonably be expected to obtain a benefit, advantage, right or privilege.
(ii) the trustee of the trust in relation to which the notional trust amount arises or an associate of that trustee;
Note:
Section 160ARDAE makes special provision in relation to benefits provided by an exempt institution to its controller.
160ARDAC(6) [Property other than money]The institution's exempt status is not disregarded in relation to a dividend if:
(a) the dividend to any extent takes the form of property other than money; and
(b) the terms and conditions on which the dividend is paid are such that the institution:
(i) does not receive immediate custody and control of the property; or
(ii) does not have the unconditional right to retain custody and control of the property in perpetuity to the exclusion of the company or an associate of the company; or
160ARDAC(7) [Value of payments less than notional trust amounts]
(iii) does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property.
The institution's exempt status is not disregarded in relation to a notional trust amount that arises in a year of income if the total value of the payments of money, and transfers of property, by the trustee to the institution from the trust that:
(a) occur during the year of income; and
(b) are attributable to notional trust amounts that arose during the year of income;
are less than the total amount of those notional trust amounts.
160ARDAC(8) [Amount treated as distributed]Subsection (7) does not apply to a notional trust amount if the Commissioner is satisfied, having regard to all the circumstances, that it would be reasonable to treat the notional trust amount as having been distributed to the institution during the year of income.
160ARDAC(9) [Distributions]The institution's exempt status is not disregarded in relation to a notional trust amount if:
(a) the trustee of the trust in relation to which the notional trust amount arises makes a distribution to the institution in relation to the notional trust amount; and
(b) the distribution to any extent takes the form of property other than money; and
(c) the terms and conditions on which the distribution is made are such that the institution:
(i) does not receive immediate custody and control of the property; or
(ii) does not have the unconditional right to retain custody and control of the property in perpetuity to the exclusion of the trustee or an associate of the trustee; or
160ARDAC(10) [When exempt status not disregarded]
(iii) does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property.
Subject to subsection (11), the institution's exempt status is not disregarded if:
(a) an arrangement is entered into as part of, or in association with, the payment of the dividend or the arising of the entitlement to, or the distribution of, the notional trust amount; and
(b) because of the arrangement the institution or another entity has acquired or will acquire (whether directly or indirectly) property, other than property comprising the dividend or notional trust amount, from:
(i) the company or an associate of the company; or
160ARDAC(11) [Options]
(ii) the trustee of the trust in relation to which the notional trust amount arises or an associate of the trustee.
Subsection (4), (5) or (10) does not apply to the dividend or notional trust amount if:
(a) the institution has the choice of:
(i) receiving payment of the dividend or notional trust amount; or
(ii) being issued with shares in the company that paid the dividend or fixed interests in the trust estate in relation to which the notional trust amount arises; and
(b) the institution is under no obligation (whether express or implied and whether legally enforceable or not) either to choose to take, or to choose not to take, the shares or interests rather than receiving payment of the dividend or notional trust amount; and
(c) the institution chooses to be issued with the shares or fixed interests; and
(d) subsection (4), (5) or (10) would, but for this subsection, apply to the dividend or notional trust amount because the institution makes that choice; and
(e) making that choice furthers the purpose for which the institution was established; and
(f) the institution does not make that choice for the purpose, or purposes that include the purpose, of benefiting:
(i) the company that paid the dividend; or
(ii) the trustee of the trust in relation to which the notional trust amount arises; or
(iii) an associate of that company or trustee (other than the institution); and
(g) any benefit obtained by the company, trustee or associate because the institution makes that choice is an ordinary incident of issuing the shares or interests to the institution or of the institution's holding of those shares or interests; and
(h) the following deal with one another on an arm's length basis in relation to any related transaction or arrangement in relation to the dividend or notional trust amount that, but for this subsection, would have prevented the institution's exempt status from being disregarded in relation to the dividend or notional trust amount:
(i) the institution;
(ii) the company that paid the dividend or the trustee of the trust in relation to which the notional trust amount arises;
(iii) any other entity involved in, connected with or party to the related transaction or arrangement.
Note:
Subparagraph (11)(a)(ii) - for fixed interest see subsections (12) to (15).
160ARDAC(12) A vested and indefeasible interest constitutes a fixed interest.For the purposes of subsection (11), a taxpayer's interest in a trust estate is a fixed interest if it is a vested and indefeasible interest in the corpus of the trust estate.
160ARDAC(13) Case where interest not defeasible.(a) the trust is a unit trust and the taxpayer holds units in the unit trust; and
(b) the units are redeemable or further units are able to be issued; and
(c) where units in the unit trust are listed for quotation in the official list of an approved stock exchange (within the meaning of section 470 ) - the units held by the taxpayer will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and
(d) where the units are not listed as mentioned in paragraph (c) - the units held by the taxpayer will be redeemed, or any further units will be issued, for their market value at the time of the redemption or issue;
then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the taxpayer's interest, as a unit holder, in the corpus of the trust estate is defeasible.
160ARDAC(14) Commissioner may determine an interest to be vested and indefeasible.(a) a taxpayer has an interest in the corpus of a trust estate; and
(b) apart from this subsection, the interest would not be a vested or indefeasible interest; and
(c) the Commissioner considers that the interest should be treated as being vested and indefeasible,having regard to:
(i) the circumstances in which the interest is capable of not vesting or the defeasance can happen; and
(ii) the likelihood of the interest not vesting or the defeasance happening; and
(iii) the nature of the trust; and
(iv) any other matter the Commissioner thinks relevant;
the Commissioner may determine that the interest is to be taken to be vested and indefeasible.
160ARDAC(15) Effect of determination.A determination made under subsection (14) has effect according to its terms.
A controller of an exempt institution is liable to pay an amount in respect of a refund paid to the institution under Division 67 of the Income Tax Assessment Act 1997 if:
(a) the institution claimed the refund on the basis of an entitlement to a rebate under Division 6, 6A or 7 of this Part; and
(b) the institution was not entitled to the rebate because of the operation of section 160ARDAC in relation to a related transaction or arrangement; and
(c) the controller or an associate of the controller benefited from the related transaction or arrangement; and
(d) some or all of the amount that the institution is liable to pay in respect of the refund remains unpaid after the day on which the amount becomes due and payable; and
(e) the Commissioner gives the controller written notice:
(i) stating that the controller is liable to pay an amount under this section; and
(ii) specifying the amount that the controller is liable to pay.
Except as provided for in subsection (5), this subsection does not affect any liability the institution has in relation to the refund.
Note:
Section 160ARDAF also provides that the exempt institution's present entitlement to a notional trust amount is disregarded for the purposes of Division 6 of Part III .
160ARDAD(2) [Objections]An entity that is dissatisfied with a decision of the Commissioner under subsection (1) in relation to the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
160ARDAD(3) [Liability]The amount the controller is liable to pay under subsection (1):
(a) is the amount specified under subparagraph (1)(e)(ii); and
(b) becomes due and payable at the end of the period of 14 days that starts on the day on which the notice referred to in paragraph (1)(e) is given. 160ARDAD(4) [Liability not to exceed benefit]
The amount the controller is liable to pay under subsection (1) must not exceed the amount or value of the benefit that the controller or associate obtained from the related transaction or arrangement.
160ARDAD(5) [Recovered amounts not to exceed refunds](a) the amounts that the Commissioner recovers in relation to the refund from controllers under subsection (1); and
(b) the amounts the Commissioner recovers in relation to the refund from the exempt institution;
must not exceed the amount of the refund.
A benefit given by an exempt institution to a controller of the institution, or an associate of a controller of the institution, is dealt with under this section if:
(a) the controller or associate:
(i) pays a dividend to the institution; or
(ii) is trustee of the trust in relation to which a notional trust amount of the institution arises; and
(b) the benefit is, or was, given to the controller or associate at any time during the period that starts 3 years before, and ends 3 years after, the dividend is paid or the notional trust amount arises. 160ARDAE(2) [Related transaction]
The controller or associate is taken, for the purposes of subsection 160ARDAC(5) , to have obtained the benefit because of a related transaction in relation to the dividend or notional trust amount.
160ARDAE(3) [Benefit]The controller or associate is taken, for the purposes of section 160ARDAD , to have benefited from a related transaction or arrangement that caused section 160ARDAC to apply to the dividend or notional trust amount at least to the extent of the benefit given to the controller or associate by the exempt institution.
160ARDAE(4) [Unreasonable to apply subsec (2) or (3)]Subsection (2) or (3) does not apply to a benefit if the Commissioner is satisfied, having regard to all the circumstances, that it would be unreasonable to apply that subsection.
The present entitlement of an exempt institution to a share of trust income is disregarded for the purposes of Division 6 of Part III if:
(a) the institution claims a refund under Division 67 of the Income Tax Assessment Act 1997 on the basis of a rebate under Division 6, 6A or 7 of this Part in relation to a notional trust amount that related to that share of trust income; and
(b) the institution was notentitled to the rebate because of the operation of section 160ARDAC in relation to a related transaction or arrangement.
The object of this Division is to provide for the application of this Part in relation to corporate trust estates and current corporate trusts.
160ARDA(2) [Interpretation]In this Part, unless the contrary intention appears:
(a) a reference to a company includes a reference to a corporate trust estate or, as the context requires, to the trustee of a corporate trust estate;
(b) a reference to a shareholder includes a reference to a unitholder;
(c) a reference to a share includes a reference to a unit;
(d) a reference to a dividend includes a reference to a corporate trust dividend; and
(e) a reference to a contract of the kind known as a ``cum-dividend'' contract includes a reference to a contract that, if a corporate trust estate were a company, would be a contract of the kind known as a ``cum-dividend'' contract.
Section 160APB does not apply in relation to a corporate trust estate.
In this Part, a reference to company tax includes a reference to tax payable by the trustee of a current corporate trust on the net income of the current corporate trust.
A reference in the definition of ``frankable dividend'' in section 160APA to a dividend within the meaning of section 6 includes a reference to a corporate trust dividend.
In applying section 160APHA to a corporate trust dividend, a scheme shall be taken to be by way of or in the nature of dividend stripping, or to have had substantially the effect of a scheme by way of or in the nature of dividend stripping if, had the corporate trust dividend been a dividend paid by a company, the scheme would have been a scheme by way of or in the nature of dividend stripping, or, as the case requires, would have had substantially the effect of a scheme by way of or in the nature of dividend stripping.
Sections 160APK and 160APW do not apply in relation to a corporate trust estate.
160ARDD(2) [Current corporate trusts]A franking credit or franking debit of a corporate trust estate does not arise in relation to:
(a) the payment of a company tax instalment for a year of income or an initial payment of tax that a company is required to make under section 221AP ;
(b) an assessment or amended assessment of company tax for a year of income; or
(c) a foreign tax credit allowable in respect of tax paid or payable in respect of income derived during a year of income;
unless the corporate trust estate is a current corporate trust in relation to the year of income.
In applying section 160APP to a dividend paid to the trustee of a corporate trust estate, the requirement in paragraph (1)(b) of that section is to be replaced by a requirement that the corporate trust estate is a current corporate trust in relation to the year of income of the corporate trust estate in which the dividend is paid.
Section 160APQ does not apply to a trust amount or partnership amount included in the assessable income of a corporate trust estate of a year of income unless the corporate trust estate is a current corporate trust in relation to that year of income.
In applying section 160AQF to a corporate trust dividend paid to a unitholder in a corporate trust estate, the requirement in paragraph (1)(b) of that section is to be replaced by a requirement that the corporate trust estate is a resident trust estate in relation to the year of income of the corporate trust estate in which the corporate trust dividend is paid.
In applying section 160AQK to franking deficit tax payable by the trustee of a corporate trust estate, a reference in that section to an eligible year of income in which a company was sufficiently resident shall be read as a reference to an eligible year of income in relation to which the corporate trust estate was a current corporate trust.
In this Subdivision:
corporate trust distribution
means a distribution, or an amount credited, that would be a corporate trust dividend if references in the definitions of
unit trust dividend
in subsections 102D(1) and section
102M
to a unitholder were references to an equity holder.
equity holder
in a corporate trust estate means the holder of an equity interest in the corporate trust estate.
equity interest
in a corporate trust estate means:
(a) a unit in the corporate trust estate; or
(b) any other interest that would be an equity interest in the corporate trust estate if references in Division 974 of the Income Tax Assessment Act 1997 to a company included references to a corporate trust estate.
non-unit dividend
means a corporate trust distribution that is not a corporate trust dividend.
non-unit equity interest
in a corporate trust estate means an equity interest in the corporate trust estate that is not a unit in the corporate trust estate.
If a provision of this Part that applies to a dividend:
(a) is taken under this Division to apply to a corporate trust dividend; and
(b) applies to a non-share dividend in the same way as it applies to a dividend;
that provision also applies to a non-unit dividend in the same way as it applies to a dividend.
160ARDHB(2)If a provision of this Part that applies to a share:
(a) is taken under this Division to apply to a unit in a corporate trust estate; and
(b) applies to a non-share equity interest in a company in the same way as it applies to a share;
that provision also applies to a non-unit equity interest in a corporate trust estate in the same way as it applies to a share.
160ARDHB(3)If a provision of this Part that applies to a shareholder:
(a) is taken under this Division to apply to a unitholder; and
(b) applies to an equity holder in a company who is not a shareholder in the same way as it applies to a shareholder;
that provision also applies to an equity holder in a corporate trust estate who is not a unitholder in the same way as it applies to a shareholder.
A provision of this Division (other than this Subdivision) that applies to a corporate trust dividend applies to a non-unit dividend in the same way as it applies to a corporate trust dividend. 160ARDHC(2)
A provision of this Division (other than this Subdivision) that applies to a unit in a corporate trust estate applies to a non-unit equity interest in a corporate trust estate in the same way as it applies to a unit in a corporate trust estate. 160ARDHC(3)
A provision of this Division (other than this Subdivision) that applies to a unitholder in a corporate trust estate applies to an equity holder in a corporate trust estate who is not a unitholder in the same way as it applies to a unitholder.
Section 160AQT does not apply to the payment of a franked dividend to the trustee of a current corporate trust.
The trustee of a current corporate trust is not entitled to a rebate of tax under section 160AQX or 160AQZ .
Sections 160AR , 160ARA and 160ARD do not apply to the trustee of a corporate trust estate in relation to a year of income unless the corporate trust estate is a current corporate trust in relation to that year of income.
A company's share capital account is
tainted
if the company transfers an amount to its share capital account from any of its other accounts.
Note:
Certain distributions from tainted share capital accounts will be unfranked dividends for which no section 46 or 46A rebate is available.
160ARDM(2) [Transfers under debt/equity swaps]However, subsection (1) does not apply if the amount:
(a) could be identified in the books of the company as an amount of share capital at all times before it was credited to the share capital account; or
(b) (Repealed by No 80 of 2006)
(c) is an amount to which subsection (2A) applies.
This subsection applies to an amount transferred into the company's share capital account if:
(a) the company is a resident; and
(b) immediately before the transfer, the company was not incorporated under the Corporations Law; and
(c) a law of the Commonwealth or of a State or Territory requires or allows either or both of the following to become part of the company's share capital account:
(i) the company's share premium account;
(ii) the company's capital redemption reserve; and
(d) the transfer is made as part of a process that leads to there being no shares in the company that have a par value; and
(e) the amount was an amount standing to the credit of the company's share premium account or capital redemption reserve immediately before the transfer.
Note:
The definition of share premium account in subsection 6(1) of this Act was repealed in relation to companies with shares with no par value (see items 5 and 67 in Schedule 5 to the Taxation Laws Amendment (Company Law Review) Act 1998 ). However, it has been retained in relation to companies with par value shares.
If the transfer of an amount as mentioned in subsection (1) is a transfer under a debt/equity swap (as defined in subsection (5)), the following provisions have effect:
(a) if the transferred amount does not exceed the lesser of:
(i) the market value of the shares referred to in subsection (5); and
subsection (1) does not apply to the transferred amount;
(ii) so much of the debt referred to in subsection (5) as is discharged, released or extinguished in return for the shares;
(b) if the transferred amount exceeds the lesser of the amounts referred to in paragraph (a), subsection (1) applies only to the excess.
Subsection (1) does not apply to an amount transferred as mentioned in that subsection if:
(a) it is transferred from an option premium reserve of the company; and
(b) the transfer is because of the exercise of options to acquire shares in the company; and
(c) premiums in respect of those options were credited to the option premium reserve.
(a) an amount or amounts are transferred as mentioned in subsection (1) in connection with the demutualisation of a mutual entity (other than a mutual entity formed by the merger of 2 or more mutual entities); and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed the total of the capital amounts:
(i) that were contributed to the entity by members of the entity before it was demutualised; and
(ii) in respect of which deductions are not allowable to the members; and
subsection (1) does not apply to the amount transferred;
(iii) that were not payments for goods or services provided by the entity;
(d) where the amount or the sum of the amounts transferred exceeds the total of those capital amounts - subsection (1) applies only to the excess.
(a) an amount or amounts are transferred as mentioned in subsection (1) in connection with the demutualisation of a mutual entity formed by the merger of 2 or more mutual entities; and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed the total of the capital amounts:
(i) that were contributed to the demutualising entity before the completion of the demutualisation by persons who became members of that entity after the merger took place; and
(ii) in respect of which deductions are not allowable to those members; and
and the market values of the merging entities, as determined by a qualified valuer, at the time of the merger - subsection (1) does not apply to the amount transferred;
(iii) that were not payments for goods or services provided by that entity;
(d) where the amount or the sum of the amounts transferred exceeds the total of those capital amounts and market values - subsection (1) applies only to the excess.
If:
(a) an amount is transferred as mentioned in subsection (1); and
(b) the amount is transferred in connection with the demutualisation of a company; and
(c) the demutualisation is implemented in accordance with a demutualisation method in Division 9A of Part III ; and
(d) the transfer occurs within the listing period in relation to the demutualisation (see subsection 121AE(6) ); and
(e) the company (the issuing company ) to whose share capital capital account the amount is transferred is:
(i) if the demutualisation method is the method specified in section 121AF or 121AG - the demutualisation company; or
(ii) if the demutualisation method is the method specified in section 121AH , 121AI , 121AJ , 121AK or 121AL - the company issuing the ordinary shares referred to in that section;
the following provisions have effect:
(f) if the sum of:
(i) the transferred amount; and
(ii) all amounts that were previously transferred to the issuing company's share capital account, from another account of the company, in connection with the demutualisation; and
does not exceed the listing day company valuation amount (as defined in subsection (6)), subsection (1) does not apply to the transferred amount;
(iii) all amounts that were previously transferred to the issuing company's retained profit account in connection with the demutualisation;
(g) if the sum of the amounts referred to in paragraph (f) exceeds the listing day company valuation amount (as defined in subsection (6)), subsection (1) applies only to the excess.
Note:
If there are several transfers of amounts to the issuing company's share capital account, this section must be applied separately in relation to each transferred amount, in the order in which the transfers are made.
If:
(a) a life assurance company (the demutualised company ) has demutualised; and
(b) the demutualisation was implemented in accordance with a demutualisation method specified in Division 9AA of Part III ; and
(c) an amount is transferred as mentioned in subsection (1); and
(d) the amount is transferred after the end of the listing period in relation to the demutualisation (see subsection 121AE(6) ); and
(e) the company transferring the amount to its share capital account is either:
(i) the demutualised company (whichever demutualisation method was used); or
(ii) if the demutualisation method was the method specified in section 121AH , 121AI , 121AJ , 121AK or 121AL - the company (the issuing company ) that issued the ordinary shares referred to in that section; and
(f) if subparagraph (e)(i) applies - the following conditions are satisfied in relation to the transferred amount:
(i) the amount is transferred from an account of the demutualised company consisting of shareholders' capital (within the meaning of the Life Insurance Act 1995 ) in relation to a statutory fund (within the meaning of that Act);
(ii) the amount was part of such an account at the time of the demutualisation; and
(g) if subparagraph (e)(ii) applies - the amount is transferred from a capital reserve created at the time of or in connection with the demutualisation;
the following provisions have effect:
(h) if the sum of:
(i) the transferred amount; and
(ii) all amounts that were previously transferred to the demutualised company's share capital account, from another account of the demutualised company, as described in paragraphs (c) to (g); and
(iii) if the demutualisation method was the method specified in section 121AH , 121AI , 121AJ, 121AK or 121AL - all amounts that were previously transferred to the issuing company's share capital account, from another account of the issuing company, as described in paragraphs (c) to (g); and
does not exceed the listing day company valuation amount (as defined in subsection (6)), subsection (1) does not apply to the transferred amount;
(iv) all amounts that were previously transferred, in connection with the demutualisation, to the share capital account of the issuing company (within the meaning of subsection (4A)) as described in paragraphs (4A)(b) to (e), or to its retained profit account as described in subparagraph (4A)(f)(iii);
(i) if the sum of the amounts referred to in paragraph (h) exceeds the listing day company valuation amount (as defined in subsection (6)), subsection (1) applies only to the excess.
Note:
If there are several transfers of amounts to the share capital account of the demutualised company or the issuing company, this subsection must be applied separately in relation to each transferred amount, in the order in which the transfers are made.
For the purposes of this section, a debt/equity swap occurs if, under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares) in the debtor.
In this section:
arrangement
means any agreement, arrangement, understanding, promise, undertaking or scheme, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.
listing day company valuation amount
has the same meaning as it has for the purposes of table 1 in section
121AS
, as that table applies in relation to the demutualisation company referred to in subsection (4A), or the demutualised company referred to in subsection (4B), as the case requires (see note 3 to that table).
A company's share capital account stops being tainted if the company makes an election under section 160ARDR or 160ARDW .
The payment of untainting tax as a result of an election under section 160ARDR or 160ARDW does not give rise to a franking credit.
This Subdivision applies to companies other than life assurance companies.
If a company transfers an amount to its share capital account from any of its other accounts, a class C franking debit of the company arises on the day of the transfer.
160ARDQ(2) [Calculating amount of debit]The amount of the debit is equal to the amount (if any) that would be calculated under subsection 160AQDB(4) as the class C required franking amount for a frankable dividend if:
(a) the dividend were paid on that day to a shareholder in the company; and
(b) the amount of the dividend were equal to the amount transferred to the share capital account. 160ARDQ(3) [Demutualisations]
(a) an amount or amounts are transferred as mentioned in subsection (1) in connection with the demutualisation of a mutual entity (other than a mutual entity formed by the merger of 2 or more mutual entities); and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed the total of the capital amounts:
(i) that were contributed to the entity by members of the entity before it was demutualised; and
(ii) in respect of which deductions are not allowable to the members; and
subsection (1) does not apply to the amount transferred;
(iii) that were not payments for goods or services provided by the entity;
(d) where the amount or the sum of the amounts transferred exceeds the total of those capital amounts - only the amount of the excess is to be treated for the purposes of this section as having been transferred.
(a) an amount or amounts are transferred as mentioned in subsection (1) in connection with the demutualisation of a mutual entity formed by the merger of 2 or more mutual entities; and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed the total of the capital amounts:
(i) that were contributed to the demutualising entity before the completion of the demutualisation by persons who became members of that entity after the merger took place; and
(ii) in respect of which deductions are not allowable to those members; and
and the market values of the merging entities, as determined by a qualified valuer, at the time of the merger - subsection (1) does not apply to the amount transferred;
(iii) that were not payments for goods or services provided by that entity;
(d) where the amount or the sum of the amounts transferred exceeds the total of those capital amounts and market values - only the amount of the excess is to be treated for the purposes of this section as having been transferred.
A company with a tainted share capital account may elect in writing to untaint that account. The election can be made at any time but cannot be revoked.
160ARDR(2) [Specifying amount of franking debit]If the company is a company with higher tax shareholders, the election must specify the amount of the franking debit to arise under subsection 160ARDS(2) . The maximum amount that may be specified is the tainting amount less the sum of:
(a) the amount of the class C franking debit (if any) that arose under section 160ARDQ when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDQ when that further amount or those further amounts were transferred.
If a company with only lower tax shareholders elects to untaint its share capital account under section 160ARDR , a class C franking debit of the company arises on the day of the election equal to the tainting amount less the sum of:
(a) the amount of the class C franking debit (if any) that arose under section 160ARDQ when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDQ when that further amount or those further amounts were transferred. 160ARDS(2) Company with higher tax shareholders.
If a company with higher tax shareholders elects to untaint its share capital account under section 160ARDR , a class C franking debit of the company arises on the day of the election equal to the amount specified in the election.
If a company with higher tax shareholders elects to untaint its share capital account under section 160ARDR , the company is liable to pay tax equal to the difference between:
(a) the tax payable by top marginal rate shareholders (see subsection (2)); and
(b) the notional franking amount (see subsection (3)). 160ARDT(2) [Calculation of tax]
In subsection (1), the tax payable by top marginal rate shareholders is the amount calculated in accordance with the formula:
where:
top marginal rate
is the maximum rate specified in column 2 of the table in
Part I of Schedule 7
to the
Income Tax Rates Act 1986
that applies for the year of income in which the election is made.
top medicare levy rate
is 2.5%.
In subsections (1) and (2), the notional franking amount is the amount calculated in accordance with the formula:
where:
total franking debits
is the sum of:
(a) the amount of the class C franking debit (if any) that arose under section 160ARDQ when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDQ when that further amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) specified in the election, that arose under subsection 160ARDS(2) when the election was made.
This Subdivision applies to life assurance companies.
If a company transfers an amount to its share capital account from any of its other accounts, a class A franking debit and a class C franking debit of the company arise on the day of the transfer.
160ARDV(2) [Amount of debit calculations](a) the class A franking debit is equal to the amount (if any) that would be calculated under subsection 160AQDB(1) as the class A required franking amount for a frankable dividend if the assumptions in subsection (3) were made; and
(b) the class C franking debit is equal to the amount (if any) that would be calculated under subsection 160AQDB(4) as the class C required franking amount for a frankable dividend if the assumptions in subsection (3) were made. 160ARDV(3) [Assumptions re: dividend]
The assumptions for paragraphs (2)(a) and (b) are that:
(a) the dividend was paid on the day of the transfer to a shareholder in the company; and
(b) the amount of the dividend were equal to the amount transferred to the share capital account.
A company with a tainted share capital account may elect in writing to untaint that account. The election can be made at any time but cannot be revoked.
160ARDW(2) [Information to be specified](a) the amount of the class A franking debit to arise under paragraph 160ARDX(a); and
(b) the amount of the class C franking debit to arise under paragraph 160ARDX(b).
For a company with only lower tax shareholders, the sum of the franking debits specified in the election under subsection (2) must equal the tainting amount less the sum of:
(a) the amount of the class A franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class A franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(d) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred. 160ARDW(4) Company with higher tax shareholders.
The sum of the franking debits that may be specified under subsection (2) must not exceed the tainting amount less the sum of:
(a) the amount of the class A franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class A franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(d) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred.
If a company elects to untaint its share capital account under section 160ARDW :
(a) a class A franking debit of the company arises on the day of the election equal to the amount of the class A franking debit specified in the election; and
(b) a class C franking debit of the company arises on the day of the election equal to the amount of the class C franking debit specified in the election.
If a company with higher tax shareholders elects to untaint its share capital account under section 160ARDW , the company is liable to pay tax equal to the difference between:
(a) the tax payable by top marginal rate shareholders (see subsection (2)); and
(b) the notional franking amount (see subsection (3)). 160ARDY(2) [Calculation of tax]
In subsection (1), the tax payable by top marginal rate shareholders is the amount calculated in accordance with the formula:
where:
top marginal rate
is the maximum rate specified in column 2 of the table in
Part I of Schedule 7
to the
Income Tax Rates Act 1986
that applies for the year of income in which the election is made.
top medicare levy rate
is 2.5%.
In subsections (1) and (2), the notional franking amount is the amount calculated in accordance with the formula:
where:
total class A franking debits
is the sum of:
(a) the amount of the class A franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class A franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred; and
(c) the amount of the class A franking debit (if any) specified in the election, that arose under subsection 160ARDX(2) when the election was made.
total class C franking debits
is the sum of:
(a) the amount of the class C franking debit (if any) that arose under section 160ARDV when the share capital account most recently became tainted; and
(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) specified in the election, that arose under subsection 160ARDX(2) when the election was made.
Untainting tax is due and payable at the end of:
(a) 21 days after an election to untaint is made under section 160ARDR ; or
(b) such later day as the Commissioner, in special circumstances, allows. 160ARDZ(2) Debt due.
Untainting tax, when it becomes due and payable, is a debt due to the Commonwealth and payable to the Commissioner.
160ARDZ(3) Application.The Commissioner must not exercise his or her power under paragraph (1)(b) on or after 1 July 2000.
Subsection (2) does not apply in relation to untainting tax that becomes due and payable on or after 1 July 2000.
Note:
For provisions about collection and recovery of untainting tax on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .
If any of the untainting tax which a person is liable to pay remains unpaid 60 days after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) started at the beginning of the 60th day after the day by which the untainting tax was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the untainting tax;
(ii) general interest charge on any of the untainting tax.
Note:
The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .
Any unpaid untainting tax may be sued for and recovered in a court of competent jurisdiction by the Commissioner suing in his or her official name.
160ARDZB(2) Application.Subsection (1) does not apply in relation to any untainting tax or additional tax that becomes due and payable on or after 1 July 2000.
Note:
For provisions about collection and recovery of untainting tax and additional tax on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .
The Commissioner may give a company, by post or otherwise, a notice specifying:
(a) the amount of any untainting tax that the Commissioner has ascertained is payable by the company; and
(b) the day on which that tax became or will become due and payable. 160ARDZC(2) Effect of notice on liability etc.
The amount of the liability of a person or persons to untainting tax, and the due date for payment of the tax, are not dependent on, or in any way affected by, the giving of a notice.
160ARDZC(3) Amendment of notice.The Commissioner may at any time amend a notice. An amended notice is a notice for the purposes of this section.
160ARDZC(4) Inconsistency between notices.If there is an inconsistency between notices that relate to the same subject matter, the later notice prevails to the extent of the inconsistency.
160ARDZC(5) Objections.A company that is dissatisfied with a notice made in relation to the company may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
(a) a notice given under section 160ARDZC ; or
(b) a document that is signed by the Commissioner and appears to be a copy of such a notice;
is conclusive evidence that:
(c) the notice was duly given; and
(d) the amount of untainting tax specified in the notice became due and payable by the company to which it was given on the day specified. 160ARDZD(2) [Pt IVC proceedings]
Subsection (1) does not apply in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the review.
The Commissioner may, by notice published in the Gazette, require each company to which the notice applies to:
(a) furnish a return in relation to the franking year specified in the notice; and
(b) furnish to the Commissioner, with the return, a copy of each declaration made for the purposes of section 160AQF in respect of frankable dividends paid to shareholders in the company during that franking year. 160ARE(2) [Time for furnishing returns]
A return under subsection (1) shall be furnished within the time required by the notice or such further time as the Commissioner allows.
If a class A deficit deferral amount (see subsection 160AQJA(2) ), a class B deficit deferral amount (see subsection 160AQJB(2) ) or a class C deficit deferral amount (see subsection 160AQJC(2) ) arises in relation to a company in relation to a refund or PAYG instalment variation credit, the company must lodge a return in relation to the deficit deferral amount within 14 days after receiving the refund or claiming the PAYG instalment variation credit.
Where the Commissioner, by notice in writing served on a company, requires the company to furnish a return in relation to a franking year, the company shall furnish the return within the time specified in the notice, whether or not the company has furnished, or is or was required to furnish, a return under section 160ARE or this section in respect of that franking year.
160ARF(2) [Company required to furnish copy of declaration]Where the Commissioner, by notice in writing served on a company, requires the company to furnish to the Commissioner a copy of each declaration made for the purposes of section 160AQF in relation to frankable dividends paid to shareholders in the company during a period specified in the notice, the company shall furnish the copies within the time specified in the notice, whether or not the company has furnished, or is or was required to furnish, those copies under any other provision of this Act in respect of that period.
A return under this Part must be in the approved form.
(a) at a particular time (in this section called the ``return time'' ), a return (in this section called the ``first return'' ) under section 160ARE or 160ARF in relation to a company in relation to a franking year is furnished; and
(b) before the return time, no return has been furnished, and no class A franking account assessment has been made, in relation to the company in relation to the franking year;
the following provisions have effect:
(c) the Commissioner shall be deemed at the return time to have made an assessment (in this section called the ``deemed assessment'' ) of:
(i) the class A franking account balance of the company for the franking year; and
being those respective amounts as specified in the first return;
(ii) any class A franking deficit tax payable by the company for the franking year;
(d) the first return shall be deemed to be a notice of the deemed assessment and to be under the hand of the Commissioner;
(e) the notice referred to in paragraph (d) shall be deemed to have been served on the company at the return time.
(a) at a particular time (the ``return time'' ), a return (the ``first return'' ) under this Part in relation to a company in relation to a franking year is lodged; and
(b) before the return time, no return has been lodged, and no class B franking account assessment has been made, in relation to the company in relation to the franking year;
the following provisions have effect:
(c) the Commissioner is taken at the return time to have made an assessment (the ``deemed assessment'' ) of:
(i) the class B franking account balance of the company for the franking year; and
being those respective amounts as specified in the first return;
(ii) any class B franking deficit tax payable by the company for the franking year;
(d) the first return is taken to be a notice of the deemed assessment and to be signed by the Commissioner;
(e) the notice referred to in paragraph (d) is taken to have been served on the company at the return time.
(a) at a particular time (the return time ), a return (the first return ) under this Part in relation to a company in relation to a franking year is lodged; and
(b) before the return time, no return has been lodged, and no class C franking account assessment has been made, in relation to the company in relation to the franking year;
the following provisions have effect:
(c) the Commissioner is taken at the return time to have made an assessment (the deemed assessment ) of:
(i) the class C franking account balance of the company for the franking year; and
being those respective amounts as specified in the first return;
(ii) any class C franking deficit tax payable by the company for the franking year;
(d) the first return is taken to be a notice of the deemed assessment and to be signed by the Commissioner;
(e) the notice referred to in paragraph (d) is taken to have been served on the company at the return time.
If, at a particular time (the ``return time'' ), a return (the ``deficit deferral tax return'' ) under section 160AREA is lodged by a company, the following provisions have effect:
(a) the Commissioner is taken, at the return time, to have made an assessment (the ``deficit deferral tax assessment'' ) of any deficit deferral tax payable by the company, being the amount as specified in the deficit deferral tax return;
(b) the deficit deferral tax return is taken to be a notice of the deficit deferral tax assessment and to be signed by the Commissioner;
(c) the notice of the deficit deferral tax assessment is taken to have been served on the company at the return time.
The Commissioner may at any time make an assessment of the class A franking account balance of a company at a particular time during a franking year and, if the company has a class A franking deficit at that time, of the class A franking deficit tax payable by the company.
The Commissioner may at any time make an assessment of the class B franking account balance of a company at a particular time during a franking year and, if the company has a class B franking deficit at that time, of the class B franking deficit tax payable by the company.
The Commissioner may at any time make an assessment of the class C franking account balance of a company at a particular time during a franking year and, if the company has a class C franking deficit at that time, of the class C franking deficit tax payable by the company.
In making an assessment under subsection (1), (1A) or (1B), the Commissioner shall apply this Part as if the beginning and end of the period to which the assessment relates were the beginning and end respectively of a franking year.
Where a company has not furnished a return in respect of a franking year, the Commissioner may make an assessment of:
(a) the class A franking account balance of the company at the end of the franking year; and
(b) any class A franking deficit tax payable by the company for the franking year.
If a company has not lodged a return in respect of a franking year, the Commissioner may make an assessment of:
(a) the class B franking account balance of the company at the end of the franking year; and
(b) any class B franking deficit tax payable by the company for the franking year.
If a company has not lodged a return in respect of a franking year, the Commissioner may make an assessment of:
(a) the class C franking account balance of the company at the end of the franking year; and
(b) any class C franking deficit tax payable by the company for the franking year.
If a company has not lodged a return in relation to a deficit deferral amount within the time specified in section 160AREA , the Commissioner may make an assessment of deficit deferral tax payable by the company in relation to the deficit deferral amount.
The Commissioner shall make an assessment of franking additional tax payable by a company.
As soon as practicable after a franking assessment is made in respect of a company, the Commissioner shall serve notice of the assessment in writing on the company.
160ARM(2) [Inclusion in other assessment notice]Notice of a franking assessment made in respect of a company may be included in notice of any other assessment made in respect of the company under this Act.
The Commissioner may, at any time within a period of 3 years after the original assessment date in relation to a franking account assessment, amend the assessment by making such alterations or additions as the Commissioner thinks necessary.
160ARN(2) [Amendment after 3 years]Subject to this section, the Commissioner may, after the end of 3 years after the original assessment date in relation to a franking account assessment, amend the assessment by making such alterations or additions as the Commissioner thinks necessary.
160ARN(3) [Amendment where no full and true disclosure](a) a company does not make a full and true disclosure of all the material facts necessary for a franking account assessment;
(b) the Commissioner makes such an assessment; and
(c) there is an under-assessment;
the Commissioner may:
(d) where the Commissioner is of the opinion that the under-assessment is due to fraud or evasion - at any time; or
(e) in any other case - within 6 years after the original assessment date in relation to the assessment;
amend the assessment by making such alterations or additions as the Commissioner thinks necessary.
160ARN(4) [Reduction of franking account assessment]No amendment reducing a franking account assessment shall be made after the end of 3 years after the original assessment date.
160ARN(5) [Further amended assessment]Where a franking account assessment has been amended under this section in any particular, the Commissioner may, within 3 years of the date that the amended assessment is made, make such further amendment of the assessment in or in respect of that particular as, in the Commissioner's opinion, is necessary to effect such reduction in the assessment as is just.
160ARN(6) [Application by company for amendment](a) applies, within 3 years after the original assessment date in relation to a franking account assessment, for an amendment of the assessment; and
(b) supplies to the Commissioner within that period all information needed by the Commissioner for the purposes of determining the application made by the company;
the Commissioner may amend the assessment, notwithstanding that that period has ended.
160ARN(7) [Amendment following objection, review or appeal]Nothing in this section prevents the amendment of a franking account assessment:
(a) in order to give effect to a decision on a review or appeal; or
(b) by way of reducing the assessment in any particular pursuant to an objection made under this Act or pending an appeal or review. 160ARN(8) [Franking additional tax assessment]
The Commissioner may at any time amend a franking additional tax assessment or a deficit deferral tax assessment.
Except as otherwise provided, an amended franking assessment is a franking assessment for all purposes of this Act.
160ARN(10) [Interpretation](a) a reference to reducing a franking account assessment is a reference to doing either or both of the following:
(i) increasing a class A franking surplus, a class B franking surplus or a class C franking surplus (including an increase from a nil class A franking account balance, a nil class B franking account balance or a nil class C franking account balance);
(ii) reducing a class A franking deficit, a class B franking deficit or a class C franking deficit (including a reduction resulting in a nil class A franking account balance, a nil class B franking account balance or a nil class C franking account balance) and the franking deficit tax payable in respect of the franking deficit;
(b) a reference to increasing a franking account assessment is a reference to doing either or both of the following:
(i) reducing a class A franking surplus, a class B franking surplus or a class C franking surplus (including a reduction resulting in a nil class A franking account balance, a nil class B franking account balance or a nil class C franking account balance);
(ii) increasing a class A franking deficit, a class B franking deficit or a class C franking deficit (including an increase from a nil class A franking account balance, a nil class B franking account balance or a nil class C franking account balance) and the franking deficit tax payable in respect of the franking deficit; and
(c) a reference to an under-assessment is a reference to a franking account assessment that would have to be increased in order to be correct.
The validity of a franking assessment is not affected because any of the provisions of this Act have not been complied with.
Section 172 applies for the purposes of this Part as if references in that section to tax included references to franking deficit tax, deficit deferral tax and franking additional tax.
Section 177 applies to a franking assessment or a return under this Part as it applies to an ordinary assessment or ordinary return.
A company that is dissatisfied with a franking assessment made in relation to the company may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
Subject to subsection (2), franking deficit tax assessed for a franking year becomes due and payable, or shall be deemed to have become due and payable, as the case requires, on the last day of the month following the end of the franking year.
160ARU(2) [Part-year assessment]Franking deficit tax payable because of an assessment under section 160ARJ is due and payable on the date specified in the notice of assessment as the date on which it is due and payable.
160ARU(3) [Liability to general interest charge]If any of the franking deficit tax which a company is liable to pay remains unpaid after the time by which the franking deficit tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) started at the beginning of the day by which the franking deficit tax was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the franking deficit tax;
(ii) general interest charge on any of the franking deficit tax.
Note:
The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .
Deficit deferral tax assessed in relation to a refundbecomes due and payable, or is taken to have become due and payable, 14 days after the refund is received.
160ARUA(2) [Liability to general interest charge]If any of the deficit deferral tax which a company is liable to pay remains unpaid after the time by which the deficit deferral tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) started at the beginning of the day by which the deficit deferral tax was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the deficit deferral tax;
(ii) general interest charge on the deficit deferral tax.
Note:
The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .
Franking additional tax is due and payable on the date specified in the notice of assessment of the franking additional tax as the date on which it is due and payable.
160ARV(2) [Liability to general interest charge]If any of the franking additional tax which a company is liable to pay remains unpaid after the time by which the franking additional tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) started at the beginning of the day by which the franking additional tax was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the franking additional tax;
(ii) general interest charge on the franking additional tax.
Note:
The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .
In sections 205 , 206 , 208 , 209, 213, 214, 215 and 218, ``income tax'' or ``tax'' includes franking deficit tax, deficit deferral tax and franking additional tax.
(a) the Commissioner amends a franking account assessment ( ``former assessment'' ) made under section 160ARH or 160ARK in relation to a company for a franking year; and
(b) the franking deficit tax payable under the amended assessment exceeds the franking deficit tax payable under the former assessment; and
(c) the company has not paid the excess amount of the franking deficit tax by the 30th day after the day on which the assessment was amended;
the company is liable to pay the general interest charge on the unpaid amount.
Note:
The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .
The company is liable to pay the general interest charge for each day in the period that:
(a) started at the beginning of the 30th day after the day on which the assessment was amended; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the excess amount of the franking deficit tax;
(ii) general interest charge on any of the excess amount.
This Division does not apply to a return or information relating to a franking year starting on or after 1 July 2000.
Note:
See instead Part 4-25 in Schedule 1 to the Taxation Administration Act 1953 .
In this Division:
"class A deficit deferral tax shortfall"
, in relation to a company and a refund, means any amount by which the company's class A statement deficit deferral tax for that refund at the time at which it was lowest is less than the company's class A proper deficit deferral tax for that refund;
"class A franking tax shortfall"
, in relation to a company and a franking year, means the amount (if any) by which the company's class A statement franking tax for that year at the time at which it was lowest is less than the company's class A proper franking tax for that year;
"class A proper deficit deferral tax"
, in relation to a company and a refund, means the class A deficit deferral tax properly payable by the company in relation to the refund;
"class A proper franking tax"
, in relation to a company and a franking year, means the class A franking deficit tax properly payable by the company in respect of that year;
"class A statement deficit deferral tax"
, in relation to a company, a refund, and a time, means the class A deficit deferral tax that would have been payable by the company in relation to the refund if the tax were assessed at that time taking into account taxation statements by the company;
"class A statement franking tax"
, in relation to a company, a franking year and a time, means the class A franking deficit tax that would have been payable by the company in respect of that year if the tax were assessed at that time taking into account taxation statements by the company;
"class B deficit deferral tax shortfall"
, in relation to a company and a refund, means any amount by which the company's class B statement deficit deferral tax for that refund at the time at which it was lowest is less than the company's class B proper deficit deferral tax for that refund;
"class B franking tax shortfall"
, in relation to a company and a franking year, means the amount (if any) by which the company's class B statement franking tax for that year at the time at which it was lowest is less than the company's class B proper franking tax for that year;
"class B proper deficit deferral tax"
, in relation to a company and a refund, means the class B deficit deferral tax properly payable by the company in relation to the refund;
"class B proper franking tax"
, in relation to a company and a franking year, means the class B franking deficit tax properly payable by the company in respect of that year;
"class B statement deficit deferral tax"
, in relation to a company, a refund and a time, means the class B deficit deferral tax that would have been payable by the company in relation to the refund if the tax were assessed at that time taking into account taxation statements by the company;
"class B statement franking tax"
, in relation to a company, a franking year and a time, means the class B franking deficit tax that would have been payable by the company in respect of that year if the tax were assessed at that time taking into account taxation statements by the company;
class C deficit deferral tax shortfall
, in relation to a company and a refund, means any amount by which the company's class C statement deficit deferral tax for that refund at the time at which it was lowest is less than the company's class C proper deficit deferral tax for that refund.
class C franking tax shortfall
, in relation to a company and a franking year, means the amount (if any) by which the company's class C statement franking tax for that year at the time at which it was lowest is less than the company's class C proper franking tax for that year.
class C proper deficit deferral tax
, in relation to a company and a refund, means the class C deficit deferral tax properly payable by the company in relation to the refund.
class C proper franking tax
, in relation to a company and a franking year, means the class C franking deficit tax properly payable by the company in respect of that year.
class C statement deficit deferral tax
, in relation to a company, a refund and a time, means the class C deficit deferral tax that would have been payable by the company in relation to the refund if the tax were assessed at that time taking into account taxation statements by the company.
class C statement franking tax
, in relation to a company, a franking year and a time, means the class C franking deficit tax that would have been payable by the company in respect of that year if the tax were assessed at that time taking into account taxation statements by the company.
"deficit deferral tax shortfall"
, in relation to a company and a refund, means class A deficit deferral tax shortfall, class B deficit deferral tax shortfall or class C deficit deferral tax shortfall.
"franking tax law"
means a law under which the extent of liability for franking deficit tax or deficit deferral tax is worked out;
"franking tax shortfall"
means:
(a) in relation to a company and a franking year:
(i) the class A franking tax shortfall in relation to the company and the franking year; or
(ii) the class B franking tax shortfall in relation to the company and the franking year; or
(iii) the class C franking tax shortfall in relation to the company andthe franking year; or
(iv) the venture capital franking tax shortfall in relation to the company and the franking year; and
(b) in relation to a company and a refund:
(i) the class A deficit deferral tax shortfall in relation to the company and the refund; or
(ii) the class B deficit deferral tax shortfall in relation to the company and the refund; or
(iii) the class C deficit deferral tax shortfall in relation to the company and the refund.
(a) a section or other provision of an Act; or
(b) a regulation under an Act;
(Omitted by No 169 of 1995)
"shortfall section"
means section
160ARZA
,
160ARZB
,
160ARZC
,
160ARZD
or
160ARZE
;
"statement deficit deferral tax"
, in relation to a company and a refund, means class A statement deficit deferral tax, class B statement deficit deferral tax or class C statement deficit deferral tax.
"statement franking tax"
, in relation to a company, a franking year and a time, means:
(a) the class A statement franking tax in relation to the company, the franking year and the time; or
(b) the class B statement franking tax in relation to the company, the franking year and the time; or
(c) the class C statement franking tax in relation to the company, the franking year and the time; or
(d) the venture capital statement franking tax in relation to the company, the franking year and the time.
"taxation statement"
means a statement made to a taxation officer orally, in a document or in any other way (including by way of electronic transmission), and includes a statement:
(a) made in an application, certificate, declaration, notification, objection, return or other document made, prepared or given, or purporting to be made, prepared, or given, under this Act or the regulations; or
(b) made in answer to a question asked under this Act or the regulations; or
(c) made in any information given, or purporting to be given, under this Act or the regulations; or
(d) made in a document given to a taxation officer otherwise than under this Act or the regulations;
but does not include a statement made in:
(e) a document produced under paragraph 264(1)(b) or 264A (1)(d) or (e) (other than a document containing particulars of the basis of the calculation of taxable income of a year of income and the tax payable in respect of that taxable income that were specified in a return in accordance with section 221AZD ); or
(f) a document produced under subparagraph 451(2)(c)(ii) or paragraph 453(1)(e) .
venture capital franking tax shortfall
, in relation to a PDF and a franking year, means the amount (if any) by which the PDF's venture capital statement franking tax for that year at the time at which it was lowest is less than the PDF's venture capital proper franking tax for that year.
venture capital proper franking tax
, in relation to a PDF and a franking year, means the venture capital deficit tax properly payable by the PDF in respect of that year.
venture capital statement franking tax
, in relation to a PDF, a franking year and a time, means the venture capital deficit tax that would have been payable by the PDF in respect of that year if the tax were assessed at that time taking into account taxation statements by the PDF.
In this Division, ``arrangement'' , ``tax audit'' and ``private ruling'' have the same meanings as in Part IVAA of the Taxation Administration Act 1953 .
160ARXA(3) [Electronic transmissions etc]If a document is given on a data processing device, or by way of electronic transmission, by a registered tax agent on behalf of a taxpayer, then for the purposes of this Part, all statements in the document are taken to have been made by the taxpayer unless the taxpayer can show that the taxpayer did not authorise the statement.
For the purposes of this Division, a company that treats a franking tax law as not applying in relation to a matter is taken to treat that law as applying in relation to that matter in a particular way.
A particular taxation statement can be taken into account in working out the franking tax shortfalls of a company for 2 or more franking years or 2 or more refunds.
(a) the class A franking deficit of a company at the end of a franking year is more than 10% of the total of the class A franking credits arising during the franking year; and
(b) the class A franked amount of a dividend paid during the franking year to a shareholder in the company exceeded the class A required franking amount for that dividend;
the company is liable to pay, by way of penalty, additional tax equal to 30% of the class A franking deficit tax that would be payable apart from subsection 160AQJ(2) by the company for the franking year.
(a) the class B franking deficit of a company at the end of a franking year is more than 10% of the total of the class B franking credits arising during the franking year; and
(b) the class B franked amount of a dividend paid during the franking year to a shareholder in the company exceeded the class B required franking amount for that dividend;
the company is liable to pay, by way of penalty, additional tax equal to 30% of the class B franking deficit tax that would be payable apart from subsection 160AQJ(2) by the company for the franking year.
(a) the class C franking deficit of a company at the end of a franking year is more than 10% of the difference between:
(i) the total of the class C franking credits arising during the franking year; and
(ii) the total of the class C franking debits arising under section 160APYBAB during the franking year; and
(b) the class C franked amount of a dividend paid during the franking year to a shareholder in the company exceeded the class C required franking amount for that dividend;
the company is liable to pay, by way of penalty, additional tax equal to 30% of the class C franking deficit tax that is payable by the company for the franking year.
A company is liable to pay, by way of penalty, additional tax equal to 30% of the class A deficit deferral tax that is payable by the company in relation to a refund if the class A deficit deferral amount that arises under subsection 160AQJA(2) in relation to the refund is greater than 10% of the amount worked out using the following formula:
A company is liable to pay, by way of penalty, additional tax equal to 30% of the class B deficit deferral tax that is payable by the company in relation to a refund if the class B deficit deferral amount that arises under subsection 160AQJB(2) in relation to the refund is greater than the amount worked out using the following formula:
A company is liable to pay, by way of penalty, additional tax equal to 30% of the class C deficit deferral tax that is payable by the company in relation to a refund if the class C deficit deferral amount that arises under subsection 160AQJC(2) in relation to the refund is greater than the amount worked out using the formula:
160ARYC(2) [PAYG instalment variation credit]
A company is liable to pay, by way of penalty, additional tax equal to 30% of the class C deficit deferral tax that is payable by the company in relation to a PAYG instalment variation credit if the class C deficit deferral amount that arises under subsection160AQJC(2) in relation to the PAYG instalment variation credit is greater than the amount worked out using the formula:
(a) a person (in this section called the ``first person'' ) gives to a shareholder in a company a dividend statement that is reasonably likely to cause the shareholder to believe that:
(i) if section 160AQT were to apply to the shareholder, an amount would be included in the assessable income of the shareholder under this Part because of the payment of the dividend; or
(ii) if section 160AQU or 160ASEP were to apply to the shareholder, the shareholder would be entitled to a rebate of tax under this Part because of the payment of the dividend; and
(b) if section 160AQT or section 160AQU or 160ASEP , as the case may be, were to apply to the shareholder:
(i) the amount that would be included in the assessable income of the shareholder under section 160AQT because of the payment of the dividend would be greater than the amount referred to in subparagraph (a)(i) of this subsection; or
(ii) the rebate to which the shareholder would be entitled under section 160AQU or 160ASEP because of the payment of the dividend would be less than the amount of the rebate referred to in subparagraph (a)(ii) of this subsection;
the first person is liable to pay, by way of penalty, additional tax equal to:
(c) if subparagraph (a)(i) applies - half of the amount of the excess referred to in subparagraph (b)(i); or
(d) if subparagraph (a)(ii) applies - the amount of the shortfall referred to in subparagraph (b)(ii).
For the purposes of this section:
(a) a nil amount shall be taken to be an amount; and
(b) a reference to a dividend statement includes a reference to a document purporting to be a dividend statement. 160ARY(3) [Effect of section]
In addition to its effect apart from this subsection, this section also has the effect that it would have if section 160AQUA had not been enacted.
Where a company refuses or fails to furnish, when and as required under this Act to do so, a return, or any information, relating to a franking year, being a return relating to or information relating to, or to the affairs of, the company, the company is liable to pay, by way of penalty, additional tax equal to double the sum of:
(a) the class A franking deficit tax (if any) payable by the company for the franking year; and
(b) the class B franking deficit tax (if any) payable by the company for the franking year; and
(c) the class C franking deficit tax (if any) payable by the company for the franking year; and
(d) the venture capital deficit tax (if any) payable by the company for the franking year.
If a company refuses or fails to furnish, when and as required under this Act to do so, a return, or any information, relating to a refund, being a return relating to or information relating to, or to the affairs of, the company, the company is liable to pay, by way of penalty, additional tax equal to double any deficit deferral tax payable in relation to the refund.
Subject to this Division, if:
(a) a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by the failure of the company or of a registered tax agent to take reasonable care to comply with this Act or the regulations;
the company is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
Subject to this Division, if:
(a) a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by the recklessness of the company or of a registered tax agent with regard to the correct operation of this Act or the regulations;
the company is liable to pay, by way of penalty, additional tax equal to 50% of the amount of the shortfall or part.
Subject to this Division, if:
(a) a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by intentional disregard by the company or by a registered tax agent of this Act or the regulations;
the company is liable to pay, by way of penalty, additional tax equal to 75% of the amount of the shortfall or part.
(a) a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by the company, in a taxation statement, treating a franking tax law as applying in relation to a matter or identical matters in a particular way; and
(c) the shortfall or part, as the case may be, so caused exceeded whichever is the higher of:
(i) $10,000; or
(ii) 1% of whichever of the following is applicable:
(A) if the shortfall is a class A franking tax shortfall - the class A franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;
(B) if the shortfall is a class B franking tax shortfall - the class B franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;
(BA) if the shortfall is a class C franking tax shortfall - the class C franking deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;
(BB) if the shortfall is a venture capital franking tax shortfall - the venture capital deficit tax that would have been payable by the company for that year if the tax were assessed on the basis of the company's return under subsection 160ARE(1) or 160ARF (1) in relation to that year;
(C) if the shortfall is a class A deficit deferral tax shortfall - the class A deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund;
(D) if the shortfall is a class B deficit deferral tax shortfall - the class B deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund;
(E) if the shortfall is a class C deficit deferral tax shortfall - the class C deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund; and
(d) when the statement was made, it was not reasonably arguable that the way in which the application of the law was treated was correct;
the company is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
For the purposes of this section, the correctness of the treatment of the application of a law in relation to a matter is reasonably arguable if, having regard to the relevant authorities and the matter, it would be concluded that what is argued for is about as likely as not correct.
160ARZD(3) [Assumption of Commissioner's exercise of discretion]For the purposes of this section, if the treatment of the application of a law assumed that the Commissioner would exercise a discretion in a particular way, the correctness of the treatment is reasonably arguable, in so far as it consisted of the assumption, if the exercise by the Commissioner of the discretion in that way would be reasonably arguably in accordance with law.
160ARZD(4) [Court's decision]For the purposes of this section, the exercise, or assumed exercise, by the Commissioner of a discretion is reasonably arguably in accordance with law if, having regard to the relevant authorities and the matter in relation to which the discretion is or would be exercised, it would be concluded that a court would be about as likely as not to hold that the exercise is or would be in accordance with law.
160ARZD(5) [Definitions]In this section:
(a) a franking tax law; or
(b) material for the purposes of subsection 15AB(1) of the Acts Interpretation Act 1901 ; or
(c) a decision of a court (whether or not an Australian court), the Tribunal or a Board of Review; or
(d) a public ruling within the meaning of Part IVAAA of the Taxation Administration Act 1953 ;
(Omitted by No 118 of 1993)
For the purposes of this section, the Commissioner exercises a discretion if the Commissioner:
(a) forms an opinion; or
(b) refuses or fails to form an opinion; or
(c) attains a state of mind; or
(d) refuses or fails to attain a state of mind; or
(e) makes a determination; or
(f) refuses or fails to make a determination; or
(g) exercises a power; or
(h) refuses or fails to exercise a power.
(a) a company has a franking tax shortfall for a franking year or a refund; and
(b) a private ruling was made on the way in which a franking tax law applies to the company in respect of the year, or the refund, in relation to an arrangement; and
(c) the shortfall or part of it was caused by the company, in a taxation statement made after the ruling was made, treating that law as applying to the company in respect of the year in relation to the arrangement in a different way;
the company is liable to pay, by way of penalty, additional tax equal to 25% of the amount of the shortfall or part.
Subsection (1) does not apply if there is an order of a court, or a decision of the Tribunal, that applies to the private ruling.
If:
(a) apart from this section, a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by the company, in a taxation statement, treating a franking tax law as applying to the company in respect of the year, or the refund, in relation to an arrangement in a particular way; and
(c) when or before the statement was made, there was an application for a private ruling on the way in which that law would apply to the company in respect of the year, or the refund, in relation to the arrangement; and
(d) in the opinion of the Commissioner, the application was one that the Commissioner is required to comply with; and
(e) when the statement was made, the private ruling had not been made;
the shortfall is not a franking tax shortfall, or the part is not part of a franking tax shortfall, for the purposes of section 160ARZA , 160ARZB , 160ARZC or 160ARZD .
If:
(a) apart from this section, a company has a franking tax shortfall for a franking year or a refund; and
(b) the shortfall or part of it was caused by the company, in a taxation statement, treating a franking tax law as applying in a particular way; and
(c) that way agrees with:
(i) advice given to the company by a taxation officer; or
(ii) a general administrative practice under this Act;
the shortfall is not a franking tax shortfall, or the part is not part of a franking tax shortfall, for the purposes of section 160ARZA , 160ARZB , 160ARZC or 160ARZD .
If 2 or more shortfall sections apply to all or a particular part of a company's franking tax shortfall, the company is liable to pay the additional tax under only one of those sections, not being a section the additional tax under which is lower than it would be under another of those sections.
If:
(a) under a shortfall section, a company is liable to pay additional tax because of a franking tax shortfall or part of a franking tax shortfall; and
(b) one or more of the following applies:
(i) the company took steps to prevent or hinder the Commissioner from becoming aware of the shortfall or part;
(ii) if the shortfall or part was caused otherwise than by the company in a taxation statement treating a franking tax law as applying to the company in relation to a matter in a particular way - the company became aware of the shortfall or part after a taxation statement by the company that was taken into account in working out the company's statement franking tax for the franking year, or the company's statement deficit deferral tax in relation to the refund, and failed to tell the Commissioner about it, in writing, within a reasonable time of becoming so aware;
(iii) if the additional tax is payable under section 160ARZA , 160ARZB or 160ARZC - the company was liable to pay additional tax under any of those sections in respect of an earlier franking year or refund;
(iv) if the additional tax is payable because the company, in a taxation statement, treated a law as applying in relation to a matter in a particular way so that section 160ARZD applied - the company was liable to pay additional tax under that section in respect of an earlier franking year or refund in respect of which the company treated that law as applying in relation to that matter or a similar matter in that way;
the company is liable to pay, by way of penalty, further additional tax equal to 20% of the amount of the additional tax.
If:
(a) under a shortfall section, a company is liable to pay additional tax in respect of a franking year or a refund because of a franking tax shortfall or part of a franking tax shortfall; and
(b) after the Commissioner had informed the company that a tax audit relating to the company in respect of the year, or the refund, was to be carried out, the company voluntarily told the Commissioner, in writing, about the shortfall or part; and
(c) telling the Commissioner could reasonably be estimated to have saved the Commissioner a significant amount of time or significant resources in the audit;
the amount of the additional tax is reduced by 20%.
If:
(a) under a shortfall section, a company is liable to pay additional tax in respect of a franking year or a refund because of a franking tax shortfall or part of a franking tax shortfall; and
(b) before the Commissioner had informed the company that a tax audit relating to the company in respect of the year, or the refund, was to be carried out, the company voluntarily told the Commissioner, in writing, about the shortfall or part;
the amount of the additional tax is reduced:
(c) if the shortfall or part is at least $1,000 - by 80%; or
(d) if the shortfall or part is less than $1,000 - to nil.
If a company voluntarily tells the Commissioner, in writing, about a franking tax shortfall, or part of a franking tax shortfall, for a year or a refund after the Commissioner has informed the company that a tax audit in relation to the company in respect of that year, or that refund, is to be carried out, the Commissioner may, if the Commissioner considers it appropriate in all the circumstances, determine that, for the purposes of sections 160ARZJ and 160ARZK, the company is taken to have told the Commissioner before being informed.
(Repealed by No 101 of 1992)
Where, but for this section, an amount of franking additional tax of less than $20 would be payable by a person in respect of an act or omission, that amount shall be increased to $20.
The Commissioner may, in the Commissioner's discretion, remit the whole or any part of the franking additional tax payable by a company but, for the purposes of the application of subsection 33(1) of the Acts Interpretation Act 1901 to the power of remission conferred by this section, nothing in this Act prevents the exercise of the power at a time before the franking additional tax assessment is made.
Section 262A applies for the purposes of this Part as if:
(a) a reference to a person carrying on a business were a reference to a company;
(b) a reference to income and expenditure were a reference to matters relevant to ascertaining:
(i) the class A franking account balance; or
(ii) the class B franking account balance; or
(iii) the class C franking account balance; or
and, if the company is a former exempting company, includes a reference to matters relevant to working out the class A exempting account balance or the class C exempting account balance; and
(iv) the venture capital sub-account balance;
(c) (Omitted by No 20 of 1990)
(d) paragraph (5)(a) of that section were omitted.
A PDF does not need to maintain records under this section in relation to a venture capital sub-account if the PDF does not establish a venture capital sub-account.
Section 264 applies for the purposes of this Part as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Part.
Part VIIA applies in relation to a return furnished, or objection lodged, for the purposes of this Part as it applies to an income tax return or objection.
[ CCH Note: Note that s 160ASEA is the first section of Div 13, and appears out of alphabetical order.]
A PDF may establish a venture capital sub-account within its class C franking account.
The surplus in a PDF's venture capital sub-account at a particular time in a franking year is the excess calculated using the formula:
| Venture capital credits
at that time |
- | Venture capital debits
at that time |
where:
venture capital credits at that time
has the meaning given by subsection (4).
venture capital debits at that time
has the meaning given by subsection (4).
The deficit in a PDF's venture capital sub-account at a particular time in a franking year is the excess calculated using the formula:
| Venture capital credits
at that time |
- | Venture capital debits
at that time |
where:
venture capital credits at that time
has the meaning given by subsection (4).
venture capital debits at that time
has the meaning given by subsection (4).
The venture capital sub-account may be in deficit even though the class C franking account as a whole is in surplus. Similarly, the venture capital sub-account may be in surplus even though the class C franking account as a whole is in deficit.
Note:
This can happen because:
In this section:
venture capital credits
at a particular time in a franking year
is the total of the PDF's venture capital credits arising in the franking year and before that time.
venture capital debits
at a particular time in a franking year is the total of the PDF's venture capital debits arising in the franking year and before that time.
A class C franking credit of a PDF is a venture capital credit of the PDF to the extent to which it is reasonably attributable to a payment of tax by the PDF in relation to a CGT event in relation to a qualifying SME investment of the PDF. This subsection does not apply to a class C franking credit that arises under subsection
160APL(3)
.
Note 1:
Venture capital credits also arise under:
Note 2:
Subsection 160APL(3) exclusion - the venture capital sub-account has its own provision for the carrying forward of end of franking year surpluses (see section 160ASEE ).
160ASED(2) [Matters to be regarded]In determining the extent to which the class C franking credit is reasonably attributable to a payment of tax by the PDF in relation to the CGT event, have regard to:
(a) the extent to which the credit can reasonably be attributed to a payment of tax by the PDF in relation to its section 124ZZB SME assessable income for a year of income; and
(b) the extent to which the section 124ZZB SME assessable income can reasonably be attributed to the CGT event. 160ASED(3) [When venture capital credit arises]
Subject to subsection (4), the venture capital credit arises at the same time as the class C franking credit arises.
160ASED(4) [Assessment day]Before a PDF's assessment day (the assessment day ) for a year of income, the PDF may elect to have the venture capital credits that would otherwise arise under subsection (1) during that year of income arise on the assessment day. If the PDF makes this election, the venture capital credits:
(a) are taken not to have arisen on the day on which the relevant class C franking credits arose; and
(b) are taken to arise on the assessment day. 160ASED(5) [Earlier date]
The PDF's assessment day for a year of income is the earlier of:
(a) the day on which the PDF furnishes its return of income for the year of income; or
(b) the day on which the Commissioner makes an assessment of the amount of the PDF's taxable income for that year of income under section 166 . 160ASED(6) Venture capital debits.
A class C franking debit of a PDF is a venture capital debit of the PDF to the extent to which it is reasonably attributable to a reduction amount in relation to a venture capital credit of the PDF.
Note:
Venture capital debits also arise under:
A reduction amount in relation to a venture capital credit of the PDF is:
(a) an amount received as a refund of a payment of tax; or
(b) an amount, in respect of a credit under paragraph 221AZM(1)(b) or (c), applied by the Commissioner against a liability of the PDF; or
(c) an amount applied by the Commissioner against a liability of the PDF; or
(d) a reduction mentioned in section 160APZ ;
to the extent to which the amount or reduction is attributable to a payment of tax that gives rise to a venture capital credit of the PDF.
160ASED(8) [Venture capital debit]Subject to subsection (9), the venture capital debit arises at the same time as the relevant class C franking debit arises.
160ASED(9) [When debit arises]If the venture capital credit referred to in subsection (7) does not arise until after the relevant class C franking debit arises, the venture capital debit arises when the venture capital credit arises.
Note:
This subsection deals with the situation in which the PDF elects under subsection (4) to have its venture capital credits arise on its assessment day. It brings the related intervening venture capital debits to account on the same day.
If a PDF has a venture capital sub-account surplus at the end of a franking year, there arises at the beginning of the next franking year a venture capital credit of the PDF equal to that venture capital sub-account surplus.
On the day on which the termination time in relation to an estimated venture capital debit of a PDF occurs, there arises a venture capital credit of the PDF equal to the estimated venture capital debit.
160ASEF(2) [Day when substitution notice is served]If, on a particular day, the Commissioner serves on a PDF a notice of an estimated venture capital debit determination that is in substitution for an earlier determination, there arises on that day a venture capital credit of the PDF equal to the amount of the venture capital debit that arose because of the earlier determination.
A venture capital debit of a PDF arises when the PDF makes a declaration under section 160ASEL that a dividend is a venture capital franked dividend to a specified extent. The amount of the debit is the venture capital franked amount of the dividend.
Note:
The debit occurs as soon as the declaration is made (and not when the dividend is later paid). By way of contrast, the debit made to the class C franking account under section 160AQB only occurs when the dividend is paid.
A venture capital debit of a PDF arises on the last day of a year of income if the PDF's net venture capital credits for the year of income exceeds whichever is the lesser of:
(a) the adjusted amount of the PDF's CGT limit for that year of income; and
(b) the adjusted amount of the tax paid by the PDF on its SME income component for that year of income.
The amount of the debit is equal to the excess.
160ASEH(2) [Net venture capital credits]The PDF's net venture capital credits for the year of income is:
| Venture capital credits - Venture capital debits |
where:
venture capital credits
is the total venture capital credits of the PDF that arise under subsection
160ASED(1)
and relate to tax in relation to taxable income of that year of income.
venture capital debits
is the total venture capital debits of the PDF that relate to tax in relation to taxable income of that year of income.
Note:
The venture capital credits that are counted for the purposes of this subsection do not include the credit that carries over the surplus in the venture capital sub-account from one franking year to the next. This arises under section 160ASEE and not under subsection 160ASED(1) .
160ASEH(3) [Calculation of CGT limit]The PDF's CGT limit for the year of income is worked out using the formula:
| Ordinary capital gains from
venture capital CGT events Ordinary capital gains from all SME CGT events |
× | Section 124ZZB SME
assessable income |
× SME tax rate |
where:
ordinary capital gains from all SME CGT events
means the total of the ordinary capital gains for the year of income for CGT events in relation to SME investments of the PDF.
ordinary capital gains from venture capital CGT events
means the total of ordinary capital gains for the year of income for CGT events in relation to shares in companies that are qualifying SME investments.
SME tax rate
is the tax rate applicable to the SME income component of the PDF for the year of income.
Note:
Section 124ZZB SME assessable income is defined in section 160APA .
160ASEH(4) [Tax paid]The tax paid by the PDF on its SME income component for the year of income is the tax paid by the PDF on its SME income component after allowing tax offsets referred to in section 4-10 of the Income Tax Assessment Act 1997.
160ASEH(5) [Interpretation]In this section:
ordinary capital gain
has the meaning given by section
124ZW
.
SME income component
has the same meaning as in section
124ZU
.
SME investment
has the meaning given by section
124ZW
.
If, on a particular day, the Commissioner serves on a PDF notice of an estimated venture capital debit determination, there arises on that day a venture capital debit of the PDF equal to the estimated venture capital debit specified in the notice.
Under section 160AQCBA , a venture capital debit of a PDF arises if:
(a) the PDF streams the payment of dividends, or the payment of dividends and the giving of other benefits, to its shareholders in a way mentioned in subsection 160AQCBA(2) ; and
(b) the Commissioner makes a determination under paragraph 160AQCBA(3)(a) in respect of a dividend paid or other benefit given by the PDF; and
(c) the franking credit benefit obtained relates to rebates allowable under section 160ASEP .
(a) has taken liability reduction action in relation to a payment of tax for which a venture capital credit arises under subsection 160ASED(1) ; or
(b) has paid a company tax instalment for which a venture capital credit arises under subsection 160ASED(1) ;
the PDF may lodge an application with the Commissioner for:
(c) the determination of an estimated venture capital debit in relation to the liability reduction action or the company tax instalment; or
(d) the determination of such an estimated venture capital debit in substitution for an earlier determination. 160ASEK(2) [Relation to refund]
An estimated venture capital debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ .
160ASEK(3) [How to apply](a) be made before the termination time; and
(b) be in the approved form; and
(c) specify the amount of the estimated venture capital debit applied for. 160ASEK(4) [Commisioner]
(a) may determine an estimated venture capital debit not greater than the amount specified in the application; and
(b) must serve notice of any such determination on the PDF. 160ASEK(5) [22nd day after application day]
(a) a PDF lodges an application with the Commissioner on a particular day (the application day ); and
(b) at the end of the 21st day after the application day, the Commissioner has neither:
(i) served notice of an estimated venture capital debit determination on the PDF; nor
(ii) refused to make an estimated venture capital debit determination;
the Commissioner is taken, on the 22nd day after the application day, to have:
(c) determined an estimated venture capital debit in accordance with the application; and
(d) served notice of the determination on the PDF. 160ASEK(6) [Notice]
A notice of an estimated venture capital debit determination has no effect if it is served after the termination time.
A PDF that has a venture capital sub-account may frank a dividend paid by the PDF as a venture capital franked dividend in accordance with this section if:
(a) the dividend is a class C franked dividend; and
(b) the dividend is paid under a resolution under which:
(i) dividends are to be paid to all shareholders in the PDF; and
160ASEL(2) [When franking of dividend formula is used]
(ii) the amount of the dividend per share is the same for each of those dividends.
The dividend is venture capital franked to the extent of the amount worked out using the formula in subsection (3) if:
(a) the PDF declares the dividend to be a venture capital franked dividend to a specified extent in the declaration that it makes under subsection 160AQF(1AAA) in relation to the dividend; and
(b) the extent to which the dividend is declared to be a venture capital franked dividend is the same for all dividends to be paid under the resolution.
Note 1:
Section 160ASEM requires the PDF to declare the dividend to be a venture capital franked dividend if the venture capital sub-account is in surplus when the subsection 160AQF(1AAA) declaration is made.
Note 2:
The PDF may anticipate future credits to the sub-account by making a declaration under this subsection even though the sub-account is in deficit or by making a declaration under this subsection that will put the sub-account into deficit.
Note 3:
If this subsection is not satisfied, the dividend is not a venture capital franked dividend.
160ASEL(3) [Formula]Subject to subsection (4), the extent to which the dividend is venture capital franked is worked out using the formula:
| Amount of dividend × | Percentage specified under
paragraph (2)(a) |
If the amount worked out under subsection (3) exceeds the class C franked amount of the dividend, the extent to which the dividend isventure capital franked is reduced by the amount of the excess.
(a) pays dividends under a resolution under which the dividends are to be paid to all shareholders in the PDF; and
(b) makes a declaration under subsection 160AQF(1AAA) in relation to the dividends; and
(c) has a surplus in its venture capital sub-account immediately before it makes the declaration;
the PDF must make a declaration under section 160ASEL so that:
(d) the dividend is venture capital franked to the same extent to which it is class C franked; or
(e) there is a nil surplus, or a deficit, in the sub-account immediately after the declaration is made. 160ASEM(2) [Amount of debit]
A venture capital debit of the PDF arises when a dividend is paid if the PDF does not venture capital frank the dividend to the extent required by subsection (1). The amount of the debit is:
| Subsection (1) franked amount - Actual franked amount |
where:
actual franked amount
is the venture capital franked amount of the dividend.
subsection (1) franked amount
is the amount that would have been the venture capital franked amount of the dividend if it had been franked in accordance with subsection (1).
A PDF is liable to pay venture capital deficit tax if it has a venture capital sub-account deficit at the end of a franking year.
Note 1:
Venture capital deficit tax is imposed by the Venture Capital Deficit Tax Act.
Note 2:
Under subsection 4(2) of that Act, for the purposes of working out the PDF's liability for venture capital deficit tax, a refund of income tax in relationto the PDF's taxable income for a year of income that is received within 6 months after the end of the franking year that ends in or at the same time as the year of income is taken to have been received on the last day of the franking year.
160ASEN(2) [Remission of part of tax]The Commissioner may, in the Commissioner's discretion, remit part of the venture capital deficit tax if the amount of the venture capital deficit tax is worked out under subsection 5(2) of the Venture Capital Deficit Tax Act. The amount remitted must not exceed the difference between:
(a) the amount of the venture capital deficit tax; and
(b) the amount that would have been the amount of that tax if it had been calculated under subsection 5(1) of the Venture Capital Deficit Tax Act. 160ASEN(3) [Where refund received]
(a) a PDF receives a refund of income tax in relation to the PDF's taxable income for a year of income; and
(b) the receipt of the refund creates or increases a deficit in the PDF's venture capital sub-account under subsection 4(2) of the Venture Capital Deficit Tax Act;
a venture capital credit of the PDF arises equal to the extent to which the receipt of the refund creates or increases that deficit. The credit arises when the refund is received.
To qualify for franking rebates under this Subdivision in relation to dividends that a PDF pays in a year of income, a taxpayer must be:
(a) the trustee of a fund that is a complying superannuation fund for the purposes of Part IX in relation to the year of income; or
(b) the trustee of a fund that is a complying ADF for the purposes of Part IX in relation to the year of income; or
(c) the trustee of a unit trust that is a pooled superannuation trust for the purposes of Part IX in relation to the year of income; or
(d) a life assurance company; or
(e) a registered organisation. 160ASEO(2) [Where trustee does no qualify]
A trustee of a fund does not qualify under paragraph (1)(a) or (b) if the fund is a self managed superannuation fund (within the meaning of the Superannuation Industry Supervision Act 1993 ).
Subject to subsections (2) and (3), if:
(a) a PDF pays a dividend to a shareholder in a year of income; and
(b) the dividend is a venture capital franked dividend to a particular extent; and
(c) the dividend is not exempt income of the shareholder (disregarding section 124ZM ); and
(d) the dividend is not paid as part of a dividend stripping operation; and
(e) the shareholder is a resident at the time the dividend is paid; and
(f) the shareholder qualifies for franking rebates under this Subdivision in relation to the dividends paid by the PDF in that year of income; and
(g) the shareholder is not:
(i) a partnership; or
(ii) a trustee (other than the trustee of an eligible entity within the meaning of Part IX); and
(h) the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and
(i) if the shareholder is a life assurance company - at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
the assets of the life assurance company from which the dividend was derived were both:
(ii) ends at the time when the dividend was paid;
(iii) included in the insurance funds of the life assurance company; and
(iv) not held on behalf of the life assurance company's shareholders;
the shareholder is entitled to a rebate of tax in the shareholder's assessment in respect of income of the year of income equal to the amount worked out using the following formula:
| Venture capital franked
amount of the dividend |
× |
Company tax rate
1 - Company tax rate |
where:
company tax rate
means the applicable general company tax rate.
If the shareholder is a life assurance company, the rebate the shareholder is entitled to is worked out using the formula:
| Subsection (1) rebate × |
CS/RA income
Total income |
where:
CS/RA income
is the amount of the shareholder's assessable income for the year of income that is allocated to the CS/RA class of business under subsection
116CE(4)
.
subsection (1) rebate
is the rebate that the shareholder would otherwise be entitled to under subsection (1).
total income
is the shareholder's assessable income for the year of income.
If the shareholder is a registered organisation within the meaning of section 116E , the shareholder is entitled to the rebate under subsection (1) in relation to a dividend only if the dividend is income derived from the shareholder's CS/RA business.
The following provisions of this Division do not apply to an event that occurs on or after 1 July 2000:
| Provisions ceasing to apply from 1 July 2000 | ||
| Item | Provision | Event |
| 1 | section 160ASI
[ see instead section 160ATD ] |
a class A or class B franking credit or debit arises after class C conversion time |
| . | ||
| 2 | section 160ASJ
[ see instead section ] |
a company ceases to be a life assurance company |
The class C conversion time of a company is the earliest of the following times:
(a) the time when the first class C franking credit of the company arises;
(b) the time immediately before the end of the 1995-96 franking year of the company;
(c) the nominated class C conversion time (see subsection (2)). 160ASF(2) [Nominated class C conversion time]
A company may, at any time before the earlier of the times mentioned in paragraphs (1)(a) and (b), make an irrevocable written election that that time, or a time that is after that time, is that company's nominated class C conversion time .
If, at a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) the company has a class A franking surplus;
then, immediately after the company's class C conversion time:
(c) a class A franking debit of the company arises equal to that class A franking surplus; and
(d) a class C franking credit of the company also arises that is worked out using the formula:
| Amount of class A franking surplus × 39 / 61 × 64 / 36 |
If, at a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) the company has a class A franking deficit;
then, immediately after the company's class C conversion time:
(c) a class A franking credit of the company arises equal to that class A franking deficit; and
(d) a class C franking debit of the company also arises that is worked out using the formula:
| Amount of class A franking deficit × 39 / 61 × 64 / 36 |
If a company has a class B franking surplus at the class C conversion time then, immediately after that time:
(a) a class B franking debit of the company arises equal to that class B franking surplus; and
(b) a class C franking credit of the company also arises that is worked out using the formula:
| Amount of class B franking surplus × 33 / 67 × 64 / 36 |
If a company has a class B franking deficit at the class C conversion time then, immediately after that time:
(a) a class B franking credit of the company arises equal to that class B franking deficit; and
(b) a class C franking debit of the company also arises that is worked out using the formula:
| Amount of class B franking deficit × 33 / 67 × 64 / 36 |
If, at a particular time after a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) a class A franking credit of the company arises under this Part (apart from under this section, subsection 160ASG(2) , subsection 160ASJ(2) or subsection 160ASK(1) );
then, at that time:
(c) a class A franking debit arises equal to the amount of the class A franking credit; and
(d) a class C franking credit also arises equal to the amount worked out using the formula:
| Amount of class A franking credit × 39 / 61 × 64 / 36 |
If, at a particular time after a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) a class A franking debit of the company arises under this Part (apart from under this section, subsection 160AQB(1) , subsection 160ASG(1) , subsection 160ASJ(1) or subsection 160ASK(1) );
then, at that time:
(c) a class A franking credit arises equal to the amount of the class A franking debit; and
(d) a class C franking debit also arises equal to the amount worked out using the formula:
| Amount of class A franking debit × 39 / 61 × 64 / 36 |
If, at a particular time after a company's class C conversion time, a class B franking credit of a company arises under this Part (apart from under this section, subsection 160ASH(2) or subsection 160ASK(2) ):
(a) a class B franking debit arises at that time equal to the amount of the class B franking credit; and
(b) a class C franking credit also arises at that time equal to the amount worked out using the formula:
| Amount of class B franking credit × 33 / 67 × 64 / 36 |
If, at a particular time after a company's class C conversion time, a class B franking debit of a company arises under this Part (apart from under this section, subsection 160AQB(2) , subsection 160ASH(1) or subsection 160ASK(2) ):
(a) a class B franking credit arises at that time equal to the amount of the class B franking debit; and
(b) a class C franking debit also arises at that time equal to the amount worked out using the formula:
| Amount of class B franking debit × 33 / 67 × 64 / 36 |
Note:
Subsection (5) deals with class B debits arising from the payment of class B franked dividends.
160ASI(5) Class B franking debit arising under subsection 160AQB(2) after class C conversion time.If, at a particular time after the company's class C conversion time, a class B franking debit of a company arises under subsection 160AQB(2) (and subsection 160ASK(2) does not apply), a class B franking credit and a class C franking debit of the company each equal to the amount of the class B franking debit arise at that time.
(a) a company is a life assurance company at the company's class C conversion time; and
(b) at a particular time (the transition time ) after the company's class C conversion time, the company ceases to be a life assurance company (other than by ceasing to be a company); and
(c) at the transition time the company has a class A franking surplus;
then, immediately after the transition time:
(d) a class A franking debit of the company equal to that class A franking surplus arises; and
(e) a class C franking credit of the company also arises that is worked out using the formula:
| Amount of class A franking surplus × 39 / 61 × 64 / 36 |
(a) a company is a life assurance company at the company's class C conversion time; and
(b) at a particular time (the transition time ) after the company's class C conversion time, the company ceases to be a life assurance company (other than by ceasing to be a company); and
(c) at the transition time the company has a class A franking deficit;
then, immediately after the transition time:
(d) a class A franking credit of the company arises equal to that class A franking deficit; and
(e) a class C franking debit of the company also arises that is worked out using the formula:
| Amount of class A franking deficit × 39 / 61 × 64 / 36 |
(a) a company, other than a life assurance company, pays a dividend at a particular time after the class C conversion time of the company; and
(b) the beginning of the reckoning day for the dividend is before the class C conversion time for the company; and
(c) a class A franking debit arises from the payment of the dividend;
then, at that time:
(d) a class A franking credit arises equal to the amount of the class A franking debit; and
(e) a class C franking debit also arises that is worked out using the formula:
| Amount of class A franking debit × |
39
61 |
× |
66
34 |
(a) a company pays a dividend at a particular time after the class C conversion time of the company; and
(b) the beginning of the reckoning day for the dividend is before the class C conversion time for the company; and
(c) a class B franking debit arises from the payment of the dividend;
then, at that time:
(d) a class B franking credit arises equal to the amount of the class B franking debit; and
(e) a class C franking debit also arises that is worked out using the formula:
| Amount of class B franking debit × |
33
67 |
× |
66
34 |
This section applies in relation to a dividend paid by a company to a shareholder if:
(a) the beginning of the reckoning day for the dividend is after the company's class C conversion time; and
(b) the dividend is the current dividend under subsection 160AQE(2) ; and
(c) the beginning ofthe reckoning day for the earlier dividend mentioned in that subsection is before the company's class C conversion time. 160ASL(2) Effect on required franking amount - companies other than life assurance companies.
If the company is not a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of RFS in subsection 160AQE(2) :
(a) the amount that will be the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
(b) the required franking amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
If the company is a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of RFS in subsection 160AQE(2) :
(a) the amount that will be the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
(b) the required franking amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
This section applies in relation to a dividend paid by a company to a shareholder if:
(a)the beginning of the reckoning day for the dividend is after the company's class C conversion time; and
(b) the dividend is the current dividend under subsection 160AQE(3) ; and
(c) the beginning of the earlier reckoning day mentioned in that subsection is before the company's class C conversion time. 160ASM(2) Effect on required franking amount - companies other than life assurance companies.
If the company is not a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of EFA in subsection 160AQE(3) , the amount that is the franked amount in relation to the earlier franked dividend is taken to be the amount worked out using the formula:
160ASM(3) Effect on required franking amount - life assurance companies.
If the company is a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of EFA in subsection 160AQE(3) , the amount that is the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
A declaration that is made before a company's class C conversion time in relation to a dividend, or dividends, paid by the company where the beginning of the reckoning day for at least one of the dividends is after that time may, despite subsection 160AQF(2) , be varied, before the reckoning day, to take account of the introduction of class C franking credits and debits.
160ASN(2) [More than one dividend paid](a) a company pays more than one dividend under a resolution; and
(b) the beginning of the reckoning day for at least one of the dividends is before the class C conversion time for the company; and
(c) the beginning of the reckoning day for at least one of the dividends is after the class C conversion time for the company; and
(d) the franked amount of each of the dividends covered by paragraph (b) is substantially similar (taking into account the different classes of franking credits) to the franked amount of each of the dividends covered by paragraph (c);
the company is taken, for the purposes of subparagraphs 160AQF(1)(c)(ii), (1AA)(c)(ii) and (1AAA)(c)(ii) to have specified the same percentage for each of the dividends to which the resolution relates.
On 1 July 2000, a company's franking accounts are dealt with as follows:
(a) first:
(i) the company's class C franking account balance (if any) at the start of that day is converted under section 160ATB to reflect the new company tax rate; and
(ii) the company's venture capital sub-account balance (if any) at the start of that day is converted under section 160ATB to reflect the new company tax rate;
(aa) then, if the company is a life assurance company, the company's class A franking account balance (if any) at the start of that day is converted under section 160ATC to reflect the new company tax rate and transferred to the class C franking account;
(b) then, any other credits and debits that occur on that day are processed.
For the purposes of this Division, if 1 July 2000 is the first day of a franking year for the company, the balance in a franking account or sub-account of the company at the start of that day includes any credit arising for that account on that day under section 160APL (carry forward of surplus from previous franking year) or 160ASEE (carry forward of venture capital sub-account surplus from previous franking year).
160ATA(3) [Tax paid at old rates]Section 160ATD tells you how to deal with franking credits and debits that arise on or after 1 July 2000 (and before 1 July 2001) but reflect tax paid at the old company tax rates.
If a company has a class C franking surplus at the start of 1 July 2000:
(a) a class C franking debit of the company arises equal to that surplus; and
(b) a class C franking credit of the company arises equal to the amount of that debit multiplied by the conversion factor in subsection (5). 160ATB(2) [PDFs - venture capital surplus]
If a PDF has a venture capital sub-account surplus at the start of 1 July 2000:
(a) a venture capital debit of the PDF arises equal to that surplus; and
(b) a venture capital credit of the PDF arises equal to the amount of that debit multiplied by the conversion factor in subsection (5). 160ATB(3) [Company with class C deficit]
If a company has a class C franking deficit at the start of 1 July 2000:
(a) a class C franking credit of the company arises equal to that deficit; and
(b) a class C franking debit of the company arises equal to the amount of that credit multiplied by the conversion factor in subsection (5). 160ATB(4) [PSF with venture capital deficit]
If a PDF has a venture capital sub-account deficit at the start of 1 July 2000:
(a) a venture capital credit of the PDF arises equal to that deficit; and
(b) a venture capital debit of the PDF arises equal to the amount of that credit multiplied by the conversion factor in subsection (5). 160ATB(5) [Conversion factor]
The conversion factor is:
|
36
64 |
× |
66
34 |
If a company that is a life assurance company has a class A franking surplus at the start of 1 July 2000:
(a) a class A franking debit of the company arises equal to that surplus; and
(b) a class C franking credit of the company arises equal to the amount of the class A franking debit multiplied by the conversion factor in subsection (3). 160ATC(2) [Franking deficit]
If a company that is a life assurance company has a class A franking deficit at the start of 1 July 2000:
(a) a class A franking credit of the company arises equal to that deficit; and
(b) a class C franking debit of the company arises equal to the amount of the class A franking credit multiplied by the conversion factor in subsection (3). 160ATC(3) [Conversion factor]
The conversion factor is:
|
39
61 |
× |
66
34 |
(a) any of the events specified in the event column of the following table occurs in relation to a company on or after 1 July 2000 and before 1 July 2001; and
(b) the event:
(i) is not a franking credit or debit arising under this Division; and
(ii) is not a franking credit arising under section 160APL (carry-forward of franking surplus); and
(iii) is not a franking debit arising under section 160APX (under-franking of a dividend), 160AQB (payment of a franked dividend), 160AQCB, 160AQCBA, 160AQCNA or 160AQCNB (dividend streaming or franking credit trading arrangements), 160AQCC (on-market share buy back arrangements) or 160AQCNC (private company distributions treated as dividends);
the adjustments specified in the adjustments column for that item are made to the company's franking accounts:
| Certain credits and debits arising on or after 1 July 2000 and before 1 July 2001 | ||||||||
| Item | Event | Adjustments | ||||||
| 1 | a class A franking credit of the company arises under this Part | (a) | a class A franking debit arises equal to the amount of the class A franking credit; and | |||||
| (b) | a class C franking credit also arises equal to the amount worked out using the formula: | |||||||
| Amount of the
class A franking credit |
× |
39
61 |
× |
66
34 |
||||
| . | ||||||||
| 2 | a class A franking debit of the company arises under this Part | (a) | a class A franking credit arises equal to the amount of the class A franking debit; and | |||||
| (b) | a class C franking debit also arises equal to the amount worked out using the formula: | |||||||
| Amount of the
class A franking debit |
× |
39
61 |
× |
66
34 |
||||
| . | ||||||||
| 3 | a class B franking credit of a company arises under this Part | (a) | a class B franking debit arises at that time equal to the amount of the class B franking credit; and | |||||
| (b) | a class C franking credit also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
class B franking credit |
× |
33
67 |
× |
66
34 |
||||
| . | ||||||||
| 4 | a class B franking debit of a company arises under this Part | (a) | a class B franking credit arises at that time equal to the amount of the class B franking debit; and | |||||
| (b) | a class C franking debit also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
class B franking debit |
× |
33
67 |
× |
66
34 |
||||
| . | ||||||||
| 5 | a class C franking credit of a company arises under this Part and the amount of the credit reflects an applicable general company tax rate of 36% | (a) | a class C franking debit arises at that time equal to the amount of the class C franking credit; and | |||||
| (b) | a class C franking credit also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
class C franking credit |
× |
36
64 |
× |
66
34 |
||||
| . | ||||||||
| 6 | a class C franking debit of a company arises under this Part and the amount of the debit reflects an applicable general company tax rate of 36% | (a) | a class C franking credit arises at that time equal to the amount of the class C franking debit; and | |||||
| (b) | a class C franking debit also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
class C franking debit |
× |
36
64 |
× |
66
34 |
||||
| . | ||||||||
| 7 | a venture capital credit of the PDF arises under this Part and the amount of the credit reflects an applicable general company tax rate of 36% | (a) | a venture capital debit of the PDF arises at that time equal to the amount of the venture capital credit; and | |||||
| (b) | a venture capital credit of the PDF also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
venture capital credit |
× |
36
64 | × |
66
34 |
||||
| . | ||||||||
| 8 | a venture capital debit of a PDF arises under this Part and the amount of the debit reflects an applicable general company tax rate of 36% | (a) | a venture capital credit of the PDF arises at that time equal to the amount of the venture capital debit; and | |||||
| (b) | a venture capital debit also arises at that time equal to the amount worked out using the formula: | |||||||
| Amount of the
venture capital debit |
× |
36
64 |
× |
66
34 |
For the purposes of items 5, 6, 7 and 8 of the table in subsection (1), the amount of a credit or debit reflects an applicable general company tax rate of 36% if:
(a) the applicable general company tax rate used to calculate the amount of the debit or credit is 36%; or
(b) (Omitted by No 89 of 2000)
(c) (Omitted by No 89 of 2000)
(d) the credit or debit is equal to the amount of an earlier debit or credit and the earlier debit or credit reflected an applicable general company tax rate of 36%.
Note 1:
Paragraph (a) - the applicable general company tax rate will always be involved in the calculation of a credit or debit if an ``adjusted amount'' is used in the calculation.
Note 2:
Paragraph (d) covers provisions such as sections 160APV , 160APVB , 160APVF , 160AQCA , 160AQCCB and 160AQCM .
(a) any of the events specified in the event column of the following table occurred in relation to a company before 1 July 2000; and
(b) the event:
(i) was not a franking credit arising under section 160APL (carry-forward of franking surplus); and
(ii) was not a franking debit arising under section 160APX (under-franking of a dividend), 160AQB (payment of a franked dividend), 160AQCB, 160AQCBA, 160AQCNA or 160AQCNB (dividend streaming or franking credit trading arrangements), 160AQCC (on-market share buy back arrangements) or 160AQCNC (private company distributions treated as dividends);
the adjustments specified in the adjustment column for that item are taken to have been made to the company's franking accounts immediately after the event occurred:
| Credits and debits arising before 1 July 2000 | ||||||||
| Item | Event | Adjustments | ||||||
| 1 | a class C franking credit of a company arose under this Part and the amount of the credit reflected an applicable general company tax rate of 34% | (a) | a class C franking debit equal to the amount of the class C franking credit; and | |||||
| (b) | a class C franking credit equal to the amount worked out using the formula: | |||||||
| Amount of the
class C franking credit |
× |
34
66 |
× |
64
36 |
||||
| . | ||||||||
| 2 | a class C franking debit of a company arose under this Part and the amount of the debit reflected an applicable general company tax rate of 34% | (a) | a class C franking credit equal to the amount of the class C franking debit; and | |||||
| (b) | a class C franking debit equal to the amount worked out using the formula: | |||||||
| Amount of the
class C franking debit |
× |
34
66 |
× |
64
36 |
||||
| . | ||||||||
| 3 | a venture capital credit of a PDF arose under this Part and the amount of the credit reflected an applicable general company tax rate of 34% | (a) | a venture capital debit of the PDF equal to the amount of the venture capital credit; and | |||||
| (b) | a venture capital credit of the PDF equal to the amount worked out using the formula: | |||||||
| Amount of the
venture capital credit |
× |
34
66 |
× |
64
36 |
||||
| . | ||||||||
| 4 | a venture capital debit of a PDF arose under this Part and the amount of the debit reflected an applicable general company tax rate of 34% | (a) | a venture capital credit of the PDF equal to the amount of the venture capital debit; and | |||||
| (b) | a venture capital debit equal to the amount worked out using the formula: | |||||||
| Amount of the
venture capital debit |
× |
34
66 |
× |
64
36 |
The amount of a credit or debit reflects an applicable general company tax rate of 34% if:
(a) the applicable general company tax rate used to calculate the amount of the credit or debit is 34%; or
(b) (Repealed by No 57 of 2002)
(c) the credit or debit is equal to the amount of an earlier debit or credit and the earlier debit or credit reflected an applicable general company tax rate of 34%.
Note 1:
Paragraph (a) - the applicable general company tax rate will always be involved in the calculation of a credit or debit if an ``adjusted amount'' is used in the calculation.
Note 2:
Paragraph (c) covers provisions such as sections 160APV , 160APVB , 160APVF , 160AQCA , 160AQCCB and 160AQCM .
(Repealed by No 89 of 2000)
This section deals with the situation in which:
(a) a company pays a number of dividends under a resolution made before 1 July 2000; and
(aa) before 1 July 2000, the dividends are declared under section 160AQF to be:
(i) if the company is not a life assurance company - class C franked; or
(ii) if the company is a life assurance company - class C franked, class A franked or both class C franked and class A franked; and
(b) some of the dividends (the first series dividends ) are paid before 1 July 2000; and
(c) some of the dividends (the second series dividends ) are paid on or after 1 July 2000.
For the purposes of this Part:
(a) the first series dividends and the second series dividends are to be taken to have been made under separate resolutions; and
(b) any declaration (the original declaration ) made under section 160AQF or 160ASEL in relation to the dividends is taken to have effect only in relation to the first series dividends; and
(c) the consequences provided for in the following table occur if the company does not make a declaration under section 160AQF or 160ASEL in relation to the second series dividends before the reckoning day for the second series dividends:
| Default declaration for second series dividends | |||||
| If ... | the company is taken to have declared that ... | under ... | |||
| 1 | the first series dividends were class C franked but not class A franked | each dividend in the second series is a class C franked dividend to the extent of the same percentage as in the original declaration | subsection 160AQF(1AAA) | ||
| . | |||||
| 2 | (a) | the company is a life assurance company; and | each dividend in the second series is a class C franked dividend to the extent of the same percentage as in the original declaration | subsection 160AQF(1AAA) | |
| (b) | the first series dividends were class A franked but not class C franked | ||||
| . | |||||
| 3 | (a) | the company is a life assurance company; and | each dividend in the second series is a class C franked dividend to the extent of the sum of: | subsection 160AQF(1AAA) | |
| (b) | the first series dividends were both class C franked and class A franked | (a) | the percentage specified in the original declaration as the extent to which the dividend was class C franked; and | ||
| (b) | the percentage specified in the original declaration as the extent to which the dividend was class A franked | ||||
| . | |||||
| 4 | the first series dividends were also franked with a venture capital franked amount | each dividend in the second series is a venture capital dividend to the extent of the same percentage as in the original declaration | section 160ASEL |
Note 1:
Paragraph (a) means that the 2 series of dividends will have separate reckoning days (see the definition of reckoning day in section 160APA ). The reckoning day for the second series dividends will be the day on which the first of the second series dividends is paid. This in turn affects the calculation of the required franking amount for the second series dividends.
Note 2:
Paragraph (b) means that the company may make a fresh declaration under section 160AQF in relation to the second series dividends. The company may wish to do this to ensure that the second series dividends are franked to the new required franking amount that will need to be calculated under Division 4. It will also mean that the company may make a fresh declaration under section 160ASEL .
This section deals with the situation in which:
(a) on or after 1 July 2000, a company pays a dividend or a number of dividends under a resolution made before 1 July 2000; and
(b) before 1 July 2000, the dividend or dividends are declared under section 160AQF to be:
(i) if the company is not a life assurance company - class C franked; or
(ii) if the company is a life assurance company - class C franked, class A franked or both class C franked and class A franked; and
(c) section 160ATF does not apply to the dividend or dividends.
For the purposes of this Part:
(a) despite subsection 160AQF(2) , the company may:
(i)vary any declaration it made under section 160AQF or 160ASEL in relation to the dividend or dividends; or
before the reckoning day for the dividend or dividends; and
(ii) revoke any declaration it made under section 160AQF or 160ASEL in relation to the dividend or dividends and make a fresh declaration under that section in relation to the dividend or dividends;
(b) a declaration varied, or a fresh declaration made, under this section cannot itself be varied or revoked.
This section deals with the situation in which:
(a) subsection 160AQE(3) is applied to work out the provisional required franking amount for a dividend (the current dividend ) paid on or after 1 July 2000; and
(b) the earlier franked dividend referred to in that subsection was paid before 1 July 2000. 160ATH(2) Effect on required franking amount - companies other than life assurance companies.
If the company is not a life assurance company at the beginning of the reckoning day for the current dividend, the component EFA in the formula in subsection 160AQE(3) is worked out using the following formula:
| Class C franked amount × |
36
64 |
× |
66
34 |
where:
class C franked amount
is the amount that is the class C franked amount of the earlier dividend.
If the company is a life assurance company at the beginning of the reckoning day for the current dividend, the component EFA in the formula in subsection 160AQE(3) is worked out using the following formula:
where:
class A franked amount
is the amount (if any) that is the class A franked amount of the earlier dividend.
class C franked amount
is the amount (if any) that is the class C franked amount of the earlier dividend.
(Repealed by No 89 of 2000)
On 1 July 2001, a company's franking accounts are dealt with as follows:
(a) first:
(i) the company's class C franking account balance (if any) at thestart of that day is converted under section 160AUB to reflect the new company tax rate; and
(ii) the company's venture capital sub-account balance (if any) at the start of that day is converted under section 160AUB to reflect the new company tax rate;
(b) then, any other credits and debits that occur on that day are processed. 160AUA(2) [Balance of franking account]
For the purposes of this Division, if 1 July 2001 is the first day of a franking year for the company, the balance in a franking account or sub-account of the company at the start of that day includes any credit arising for that account on that day under section 160APL (carry forward of surplus from previous franking year) or 160ASEE (carry forward of venture capital sub-account surplus from previous franking year).
160AUA(3) [Tax paid at old company rates]Section 160AUC tells you how to deal with franking credits and debits that arise on or after 1 July 2001 but reflect tax paid at the old company tax rates.
If a company has a class C franking surplus at the start of 1 July 2001:
(a) a class C franking debit of the company arises equal to that surplus; and
(b) a class C franking credit of the company arises equal to the amount of that debit multiplied by the conversion factor in subsection (5). 160AUB(2) [Conversion of PDF with a venture capital sub-account surplus]
If a PDF has a venture capital sub-account surplus at the start of 1 July 2001:
(a) a venture capital debit of the PDF arises equal to that surplus; and
(b) a venture capital credit of the PDF arises equal to the amount of that debit multiplied by the conversion factor in subsection (5). 160AUB(3) [Conversion of class C franking deficit]
If a company has a class C franking deficit at the start of 1 July 2001:
(a) a class C franking credit of the company arises equal to that deficit; and
(b) a class C franking debit of the company arises equal to the amount of that credit multiplied by the conversion factor in subsection (5). 160AUB(4) [Conversion of PDF with a venture capital sub-account deficit]
If a PDF has a venture capital sub-account deficit at the start of 1 July 2001:
(a) a venture capital credit of the PDF arises equal to that deficit; and
(b) a venture capital debit of the PDF arises equal to the amount of that credit multiplied by the conversion factor in subsection (5). 160AUB(5) [Conversion factor]
The conversion factor is:
|
34
66 |
× |
70
30 |
(a) any of the events specified in the event column of the following table occurs in relation to a company on or after 1 July 2001; and
(b) the event:
(i) is not a franking credit or debit arising under this Division; and
(ii) is not a franking credit arising under section 160APL (carry forward of surplus from previous franking year) or 160ASEE (carry forward of venture capital sub-account surplus from previous franking year); and
(iii) is not a franking debit arising under section 160APX (under-franking of a dividend), 160AQB (payment of a franked dividend), 160AQCB , 160AQCBA , 160AQCNA or 160AQCNB (dividend streaming or franking credit trading arrangements), 160AQCC (on-market share buy back arrangements) or 160AQCNC (private company distributions treated as dividends);
the adjustments specified in the adjustments column for that item are made to the company's franking accounts:
| Certain credits and debits arising on or after 1 July 2001 | |||||||
| Item | Event | Adjustments | |||||
| 1 | a class A franking credit of the company arises under this Part | (a) | a class A franking debit arises equal to the amount of the class A franking credit; and | ||||
| (b) | a class C franking credit also arises equal to the amount worked out using the formula: | ||||||
| Amount of the
class A franking credit |
× |
39
61 |
× |
70
30 |
|||
| 2 | a class A franking debit of the company arises under this Part | (a) | a class A franking credit arises equal to the amount of the class A franking debit; and | ||||
| (b) | a class C franking debit also arises equal to the amount worked out using the formula: | ||||||
| Amount of the
class A franking debit |
× |
39
61 |
× |
70
30 |
|||
| 3 | a class B franking credit of a company arises under this Part | (a) | a class B franking debit arises at that time equal to the amount of the class B franking credit; and | ||||
| (b) | a class C franking credit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class B franking credit |
× |
33
67 |
× |
70
30 |
|||
| 4 | a class B franking debit of a company arises under this Part | (a) | a class B franking credit arises at that time equal to the amount of the class B franking debit; and | ||||
| (b) | a class C franking debit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class B franking debit |
× |
33
67 |
× |
70
30 |
|||
| 5 | a class C franking credit of a company arises under this Part and the amount of the credit reflects an applicable general company tax rate of 34% | (a) | a class C franking debit arises at that time equal to the amount of the class C franking credit; and | ||||
| (b) | a class C franking credit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking credit |
× |
34
66 |
× |
70
30 |
|||
| 6 | a class C franking debit of a company arises under this Part and the amount of the debit reflects an applicable general company tax rate of 34% | (a) | a class C franking credit arises at that time equal to the amount of the class C franking debit; and | ||||
| (b) | a class C franking debit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking debit |
× |
34
66 |
× |
70
30 |
|||
| 7 | a venture capital credit of the PDF arises under this Part and the amount of the credit reflects an applicable general company tax rate of 34% | (a) | a venture capital debit of the PDF arises at that time equal to the amount of the venture capital credit; and | ||||
| (b) | a venture capital credit of the PDF also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital credit |
× |
34
66 |
× |
70
30 |
|||
| 8 | a venture capital debit of a PDF arises under this Part and the amount of the debit reflects an applicable general company tax rate of 34% | (a) | a venture capital credit of the PDF arises at that time equal to the amount of the venture capital debit; and | ||||
| (b) | a venture capital debit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital debit |
× |
34
66 |
× |
70
30 |
|||
| 9 | a class C franking credit of a company arises under this Part and the amount of the credit reflects an applicable general company tax rate of 36% | (a) | a class C franking debit arises at that time equal to the amount of the class C franking credit; and | ||||
| (b) | a class C franking credit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking credit |
× |
36
64 |
× |
70
30 |
|||
| 10 | a class C franking debit of a company arises under this Part and the amount of the debit reflects an applicable general company tax rate of 36% | (a) | a class C franking credit arises at that time equal to the amount of the class C franking debit; and | ||||
| (b) | a class C franking debit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking debit |
× |
36
64 |
× |
70
30 |
|||
| 11 | a venture capital credit of the PDF arises under this Part and the amount of the credit reflects an applicable general company tax rate of 36% | (a) | a venture capital debit of the PDF arises at that time equal to the amount of the venture capital credit; and | ||||
| (b) | a venture capital credit of the PDF also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital credit |
× |
36
64 |
× |
70
30 |
|||
| 12 | a venture capital debit of a PDF arises under this Part and the amount of the debit reflects an applicable general company tax rate of 36% | (a) | a venture capital credit of the PDF arises at that time equal to the amount of the venture capital debit; and | ||||
| (b) | a venture capital debit also arises at that time equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital debit |
× |
36
64 |
× |
70
30 |
For the purposes of items 5, 6, 7 and 8 of the table in subsection (1), the amount of a credit or debit reflects an applicable general company tax rate of 34% if:
(a) the applicable general company tax rate used to calculate the amount of the debit or credit is 34%; or
(b) the debit arises under subsection 160AQC(3) or section 160ASEI and the amount specified in the application for the estimated debit concerned is based on a 34% general company tax rate; or
(c) the credit or debit is equal to the amount of an earlier debit or credit and the earlier debit or credit reflected an applicable general company tax rate of 34%.
Note 1:
Paragraph (a) - the applicable general company tax rate will always be involved in the calculation of a credit or debit if an ``adjusted amount'' is used in the calculation.
Note 2:
Paragraph (c) covers provisions such as sections 160APV , 160APVB , 160AQCA and 160AQCCB .
160AUC(3) [When amount of credit or debit reflects company tax rate of 36%]For the purposes of items 9, 10, 11 and 12 of the table in subsection (1), the amount of a credit or debit reflects an applicable general company tax rate of 36% if:
(a) the applicable general company tax rate used to calculate the amount of the debit or credit is 36%; or
(b) the credit or debit is equal to the amount of an earlier debit or credit and the earlier debit or credit reflected an applicable general company tax rate of 36%.
Note 1:
Paragraph (a) - the applicable general company tax rate will always be involved in the calculation of a credit or debit if an ``adjusted amount'' is used in the calculation.
Note 2:
Paragraph (b) covers provisions such as sections 160APV , 160APVB , 160AQCA and 160AQCCB .
(a) any of the events specified in the event column of the following table occurred in relation to a company before 1 July 2001; and
(b) the event:
(i) was not a franking credit arising under section 160APL (carry forward of surplus from previous franking year) or 160ASEE (carry forward of venture capital sub-account surplus from previous franking year); and
(ii) was not a franking debit arising under section 160APX (under-franking of a dividend), 160AQB (payment of a franked dividend), 160AQCB , 160AQCBA , 160AQCNA or 160AQCNB (dividend streaming or franking credit trading arrangements), 160AQCC (on-market share buy back arrangements) or 160AQCNC (private company distributions treated as dividends);
the adjustments specified in the adjustment column for that item are taken to have been made to the company's franking accounts immediately after the event occurred:
| Credits and debits arising before 1 July 2001 | |||||||
| Item | Event | Adjustments | |||||
| 1 | a class C franking credit of a company arose under this Part and the amount of the credit reflectd an applicable general company tax rate of 30% | (a) | a class C franking debit equal to the amount of the class C franking credit; and | ||||
| (b) | a class C franking credit equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking credit |
× |
30
70 |
× |
66
34 |
|||
| 2 | a class C franking debit of a company arose under this Part and the amount of the debit reflected an applicable general company tax rate of 30% | (a) | a class C franking credit equal to the amount of the class C franking debit; and | ||||
| (b) | a class C franking debit equal to the amount worked out using the formula: | ||||||
| Amount of the
class C franking debit |
× |
30
70 |
× |
66
34 |
|||
| 3 | a venture capital credit of a PDF arose under this Part and the amount of the credit reflected an applicable general company tax rate of 30% | (a) | a venture capital debit of the PDF equal to the amount of the venture capital credit; and | ||||
| (b) | a venture capital credit of the PDF equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital credit |
× |
30
70 |
× |
66
34 |
|||
| 4 | a venture capital debit of a PDF arose under this Part and the amount of the debit reflected an applicable general company tax rate of 30% | (a) | a venture capital credit of the PDF equal to the amount of the venture capital debit; and | ||||
| (b) | a venture capital debit equal to the amount worked out using the formula: | ||||||
| Amount of the
venture capital debit |
× |
30
70 |
× |
66
34 |
The amount of a credit or debit reflects an applicable general company tax rate of 30% if:
(a) the applicable general company tax rate used to calculate the amount of the credit or debit is 30%; or
(b) the debit arises under subsection 160AQC(3) or section 160ASEI and the amount of the estimated debit concerned is based on a 30% general company tax rate; or
(c) the credit or debit is equal to the amount of an earlier debit or credit and the earlier debit or credit reflected an applicable general company tax rate of 30%.
Note 1:
Paragraph (a) - the applicable general company tax rate will always be involved in the calculation of a credit or debit if an `adjusted amount'' is used in the calculation.
Note 2:
Paragraph (c) covers provisions such as sections 160APV , 160APVB , 160AQCA and 160AQCCB .
This section deals with the situation in which:
(a) a company pays a number of class C franked dividends under a resolution made before 1 July 2001; and
(b) some of the dividends (the first series dividends ) are paid before 1 July 2001; and
(c) some of the dividends (the second series dividends ) are paid on or after 1 July 2001. 160AUE(2) [First and second series dividends]
For the purposes of this Part:
(a) the first series dividends and the second series dividends are to be taken to have been made under separate resolutions; and
(b) any declaration (the original declaration ) made under section 160AQF or 160ASEL in relation to the dividends is taken to have effect only in relation to the first series dividends; and
(c) the consequences provided for in the following table occur if the company does not make a declaration under section 160AQF or 160ASEL in relation to the second series dividends before the reckoning day for the second series dividends:
| Default declaration for second series dividends | |||
| If... | the company is taken to have declared that... | under... | |
| 1 | the first series dividends were class C franked | each dividend in the second series is a class C franked dividend to the extent of the same percentage as in the original declaration | subsection 160AQF(1AAA) |
| 2 | the first series dividends were also franked with a venture capital franked amount | each dividend in the second series is a venture capital dividend to the extent of the same percentage as in the original declaration | section 160ASEL |
Note 1:
Paragraph (a) means that the 2 series of dividends will have separate reckoning days (see the definition of reckoning day in section 160APA ). The reckoning day for the second series dividends will be the day on which the first of the second series dividends is paid. This in turn affects the calculation of the required franking amount for the second series dividends.
Note 2:
Paragraph (b) means that the company may make a fresh declaration under section 160AQF in relation to the second series dividends. The company may wish to do this to ensure that the second series dividends are franked to the new required franking amount that will need to be calculated under Division 4. It will also mean that the company may make a fresh declaration under section 160ASEL .
This section deals with the situation in which:
(a) on or after 1 July 2001, a company pays a class C franked dividend or a number of class C franked dividends under a resolution made before 1 July 2001; and
(b) section 160AUE does not apply to the dividend or dividends. 160AUF(2) [Company may vary or revoke declaration]
For the purposes of this Part:
(a) despite subsection 160AQF(2) , the company may:
(i) vary any declaration it made under section 160AQF or 160ASEL in relation to the dividend or dividends; or
before the reckoning day for the dividend or dividends; and
(ii) revoke any declaration it made under section 160AQF or 160ASEL in relation to the dividend or dividends and make a fresh declaration under that section in relation to the dividend or dividends;
(b) a declaration varied, or a fresh declaration made, under this section cannot itself be varied or revoked.
This section deals with the situation in which:
(a) subsection 160AQE(3) is applied to work out the provisional required franking amount for a dividend (the current dividend ) paid on or after 1 July 2001; and
(b) the earlier franked dividend referred to in that subsection was paid before 1 July 2001. 160AUG(2) Effect on required franking amount.
The component EFA in the formula in subsection 160AQE(3) is worked out using the following formula:
| Class C franked amount × |
34
66 |
× |
70
30 |
where:
class C franked amount
is the amount that is the class C franked amount of the earlier dividend.