CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-6
-
THE IMPUTATION SYSTEM
History
Pt 3-6 inserted by No 48 of 2002.
Division 207
-
Effect of receiving a franked distribution
History
Div 207 inserted by No 48 of 2002.
Subdivision 207-D
-
No gross-up or tax offset where distribution would not be taxed
History
Subdiv 207-D substituted by No 83 of 2004, s 3 and Sch 10 item 8, applicable to events that occur on or after 1 July 2002, subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997
set out in the
Income Tax (Transitional Provisions) Act 1997
. Subdiv 207-D formerly read:
Subdivision 207-D
-
Adjustments where the ultimate recipient of a distribution is not a resident
History
Subdiv 207-D inserted by No 48 of 2002.
What this Subdivision is about
207-80
Adjustments are made where a franked distribution flows indirectly to a non-resident to ensure that the recipient is not taxed inappropriately.
History
S 207-80 inserted by No 48 of 2002.
Adjustments where an entity to which a distribution flows indirectly is a non-resident
207-85(1)
Where a franked distribution flows indirectly to an entity who is not a resident, an amount of the distribution, worked out by applying the franking percentage for the distribution to the amount of the distribution that flows indirectly to the entity, is not included in the assessable income of the entity because of section 128D of the
Income Tax Assessment Act 1936
.
207-85(2)
However, unless an adjustment were made, that entity's share of the franking credit on the distribution would be assessed.
207-85(3)
Adjustments are therefore made under this Subdivision to ensure that this does not occur.
History
S 207-85 inserted by No 48 of 2002.
Adjustment for non-resident beneficiaries
207-90
Where:
(a)
a *franked distribution *flows indirectly to an individual or a *corporate tax entity as beneficiary of a trust; and
(b)
the distribution does not flow indirectly to the entity as trustee of a trust; and
(c)
a share of the *net income of the trust is included in the assessable income of the entity, for the income year in which the distribution is made, under section 97,
98A
or
100
of the
Income Tax Assessment Act 1936
; and
(d)
but for section
128D
of that Act, that share would include income to which section
128B
of that Act would apply but for paragraph 128B(3)(ga);
a deduction is allowed from the assessable income of the entity for that income year of an amount worked out under Subdivision
207-J
.
History
S 207-90 inserted by No 48 of 2002.
Adjustment where trustee assessed for non-resident beneficiary
207-95
Where:
(a)
a *franked distribution *flows indirectly to the trustee of a trust; and
(b)
the trustee is liable to be assessed on a share of the *net income of the trust, for the income year in which the distribution is made, under section 98 of the
Income Tax Assessment Act 1936
; and
(c)
but for section
128D
of that Act, that share would include income to which section
128B
of that Act would apply but for paragraph 128B(3)(ga);
the share of the net income of the trust on which the trustee is liable to be assessed is reduced by an amount worked out under Subdivision
207-J
.
History
S 207-95 inserted by No 48 of 2002.
Adjustment for non-resident partners
207-100
Where:
(a)
a *franked distribution *flows indirectly to an individual or *corporate tax entity as partner in a *partnership; and
(b)
the distribution does not flow indirectly to that entity as trustee of a trust; and
(c)
either:
(i)
a share of the *net income of the partnership is included in the entity's assessable income, for the income year in which the distribution is made, under subsection
92(1)
of the
Income Tax Assessment Act 1936
; or
(ii)
a share of the *partnership loss of the partnership is allowable as a deduction to the entity, for the income year in which the distribution is made, under subsection 92(2) of that Act; and
(d)
but for section
128D
of that Act, that share would include income to which section
128B
of that Act would apply but for paragraph 128B(3)(ga);
a deduction is allowed from the assessable income of the entity for that income year of the amount worked out under Subdivision
207-J
.
History
S 207-100 inserted by No 48 of 2002.
Operative provisions
SECTION 207-90
Distribution that is made to an entity
Whole of distribution not assessable
207-90(1)
If:
(a)
a *franked distribution is made to an entity; and
(b)
the distribution does not *flow indirectly through the entity to another entity; and
(c)
the distribution is *exempt income or *non-assessable non-exempt income in the hands of the entity;
then, for the purposes of this Act:
(d)
the amount of the *franking credit on the distribution is not included in the assessable income of the entity under section
207-20
; and
(e)
the entity is not entitled to a *tax offset under this Division because of the distribution.
History
S 207-90(1) amended by No 83 of 2004.
Part of distribution not assessable
207-90(2)
If:
(a)
a *franked distribution is made to an entity; and
(b)
the distribution does not *flow indirectly through the entity to another entity; and
(c)
a part of the distribution (the
relevant part
) is *exempt income or *non-assessable non-exempt income in the hands of the entity;
then, for the purposes of this Act:
(d)
the amount of the distribution is taken to have been reduced by the relevant part; and
(e)
the amount of the *franking credit on the distribution is to be worked out as follows:
| |
*Franked distribution
apart from this section
−
Relevant part
*Franked distribution
apart from this section |
× |
*Franking credit
on the *franked distribution
apart from this section |
|
History
S 207-90(2) amended by No 83 of 2004, s 3 and Sch 10 item 26, by substituting
"
*non-assessable non-exempt income
"
for
"
an amount that is neither assessable income nor exempt income
"
in para (c), applicable to assessments for the 2003-04 income year and later income years.
S 207-90 inserted by No 83 of 2004, s 3 and Sch 10 item 8, applicable to events that occur on or after 1 July 2002, subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997
set out in the
Income Tax (Transitional Provisions) Act 1997
. For former wording of s 207-90 see note under Subdiv 207-D heading.
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