INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 2 - Franking surplus or deficit  

Subdivision B - General provisions on franking credits  

SECTION 160APP   RECEIPT OF FRANKED DIVIDENDS  

160APP(1AA)   [Limited application]  

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.

160APP(1)   [Class A franking credit arises]  

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.

160APP(1A)   [Class B franking credit arises]  

Subject to this section, if:

(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.

160APP(1B)   [Class C franking credit arises]  

Subject to this section, if:

(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.

160APP(1C)   [Commissioner's determination on franking debit or credit]  

If a determination is made under paragraph 160AQCBA(3)(b) in respect of the dividend, no franking credit arises in respect of the dividend.

160APP(1D)   [Paragraph 177EA(5)(b) determination]  

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.

160APP(1E)   [Reduction of credit]  

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.

160APP(2)   [Dividend wholly exempt income]  

No franking credit arises if the dividend is wholly exempt income of the shareholder.

160APP(3)   [Dividend partly exempt income]  

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.

160APP(3A)   [Dividend paid by PDFs]  

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.

160APP(4)    

160APP(5)   [Assets held on behalf of shareholders]  

If:

(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.

160APP(6)   [Dividend paid as part of dividend stripping operation]  

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.