Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)

Schedule 10   Franked distributions received through certain partnerships and trustees

Part 2   Amendments commencing on 29 June 2002

Income Tax Assessment Act 1997

11   Sections 207-110, 207-115, 207-120 and 207-125

Repeal the sections, substitute:

207-110 Exceptions to sections 207-90 and 207-95

(1) This section applies to an entity to whom a *franked distribution is made, or *flows indirectly, in any of the following circumstances:

(a) the entity is an *exempt institution that is eligible for a refund and the distribution does not flow indirectly to the entity as a partner in a partnership under subsection 207-50(2);

(b) the distribution is, or the entity's *share of the distribution would have been, this kind of income in its hands:

(i) *exempt income under section 282B, 283 or 297B of the Income Tax Assessment Act 1936 (certain income derived by an eligible entity within the meaning of Part IX of that Act); or

(ii) an amount that is neither assessable income nor exempt income under paragraph 320-37(1)(a) (segregated exempt assets of a life insurance company) or paragraph 320-37(1)(d) (certain amounts received by a friendly society) of this Act.

(2) The following have effect in relation to the entity:

(a) section 207-90 or 207-95 (as appropriate) does not apply to the entity;

(b) if the entity would, apart from section 207-90 or 207-95, be entitled to a *tax offset under section 207-20 or 207-45 in relation to the distribution - the entity is entitled to that tax offset;

(c) if the entity would not be entitled to such a tax offset, the entity is entitled to a tax offset under this section that is equal to:

(i) if the distribution is made to the entity - the *franking credit on the distribution; or

(ii) if the distribution *flows indirectly to the entity - the entity's *share of the franking credit on the distribution;

(d) if the distribution flows indirectly through the entity to another entity - subsection 207-35(3) and section 207-45 do not apply to that other entity.

Note: Paragraph (2)(c) only applies to an exempt institution that is eligible for a refund and that is not entitled to a tax offset under section 207-20 or 207-45. An entity covered by paragraph (1)(b) will, in all cases, be entitled to a tax offset under section 207-20 or 207-45.