New International Tax Arrangements (Foreign-owned Branches and Other Measures) Act 2005 (64 of 2005)

Schedule 1   Dividends received by foreign-owned branches

Income Tax Assessment Act 1997

7   After subsection 67-25(1D)

Insert:

(1DA) A *tax offset is not subject to the refundable tax offset rules if:

(a) an entity is entitled to the tax offset under Division 207 because a *franked distribution is made, or *flows indirectly, to the entity; and

(b) the entity is a foreign resident and carries on business in Australia at or through a permanent establishment of the entity in Australia, being a permanent establishment within the meaning of:

(i) a double tax agreement (as defined in Part X of the Income Tax Assessment Act 1936) that relates to a foreign country and affects the entity; or

(ii) subsection 6(1) of that Act, if there is no such agreement; and

(c) the distribution is attributable to the permanent establishment.