Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-6
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THE IMPUTATION SYSTEM
Division 208
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Exempting entities and former exempting entities
Subdivision 208-F
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Exempting accounts and franking accounts of exempting entities and former exempting entities
Operative provisions
SECTION 208-115 Exempting credits 208-115(1)
The following table sets out when a credit arises in the *exempting account of a *former exempting entity. A credit in the former exempting entity ' s account is called an exempting credit .
208-115(2)
The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.
View history note
Hide history noteSECTION 208-115 Exempting credits 208-115(1)
The following table sets out when a credit arises in the *exempting account of a *former exempting entity. A credit in the former exempting entity ' s account is called an exempting credit .
| Exempting Credits | |||
| Item | If: | A credit of: | Arises: |
| 1 | the entity had a *franking surplus at the time it became a *former exempting entity (at the time of its transition ) | an amount equal to:
(a) in a case not covered by paragraph (b) - the franking surplus; or |
immediately after its transition |
| (b) if the entity has been a former exempting entity at any time within a period of 12 months before its transition - so much of the franking surplus as would have been the entity ' s *exempting surplus had it remained a former exempting entity throughout the period | |||
| 2 | the entity receives a *distribution *franked with an exempting credit; and | an amount worked out under subsection 208-165(1) | on the day on which the distribution is made |
| the entity satisfies the *residency requirement for the income year in which the distribution is made and at the time the distribution is made; and | |||
| some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the entity; and | |||
| the entity is an *eligible continuing substantial member in relation to the distribution; and | |||
| the distribution is not affected by a manipulation of the imputation system mentioned in section 208-160 | |||
| 3 | the entity receives a *distribution *franked with an exempting credit; and | an amount worked out under subsection 208-170(1) | on the day on which the distribution is made |
| the entity satisfies the *residency requirement for the income year in which the distribution is made and at the time the distribution is made; and | |||
| some part of the distribution is neither *exempt income nor *non-assessable non-exempt income of the entity; and | |||
| the entity is an *eligible continuing substantial member in relation to the distribution; and | |||
| the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution | |||
| 4 | a *distribution *franked with an exempting credit *flows indirectly to the entity (the
ultimate recipient
); and
the recipient of the distribution is an *eligible continuing substantial member in relation to the distribution; and except for the fact that the ultimate recipient is not an eligible continuing substantial member in relation to the distribution, it would have been entitled to an *exempting credit because of the distribution had the distribution been made to the ultimate recipient |
an amount equal to the exempting credit that would have arisen for the ultimate recipient if:
(a) the ultimate recipient had been an eligible continuing substantial member in relation to the distribution; and (b) the distribution had been made to the ultimate recipient; and (c) the distribution had been franked with an exempting credit equal to the ultimate recipient ' s *share of the actual exempting credit |
on the day on which the distribution is made |
| 5 | the entity *pays a *PAYG instalment; and
the entity satisfies the *residency requirement for the income year in relation to which the PAYG instalment is paid; and the entity was an *exempting entity for the whole or part of the relevant *PAYG instalment period |
an amount equal to that part of the payment that is attributable to the period during which the entity was an exempting entity | on the day on which the payment is made |
| 6 | the entity *pays income tax; and
the entity satisfies the *residency requirement for the income year for which the tax is paid; and the entity was an *exempting entity for the whole or part of that income year |
an amount equal to that part of the payment that is attributable to the period during which the entity was an exempting entity | on the day on which the payment is made |
| 7 | the *exempting account of the entity would, apart from this item, be in *deficit immediately before the end of an income year | an amount equal to the deficit | immediately before the end of the income year |
| 8 | the entity becomes an *exempting entity; and
the entity has an *exempting deficit at the time it becomes an exempting entity |
an amount equal to the exempting deficit | immediately after the entity becomes an exempting entity |
| 9 | the entity *pays diverted profits tax; and
the entity satisfies the *residency requirement for the income year for which the tax is paid; and the entity was an *exempting entity for the whole or part of that income year |
an amount equal to that part of the payment that is attributable to the period during which the entity was an exempting entity, multiplied by the proportion worked out under subsection (2) | on the day on which the payment is made |
208-115(2)
The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.
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