INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 7 - Dividends paid to trusts and partnerships  

Subdivision BA - Maximum franking credits, maximum franking rebates, and maximum potential rebate amounts (and allowable deductions), for taxpayers who elect under section 160APHR  

SECTION 160AQZE   MAXIMUM FRANKING CREDITS  

160AQZE(1)   [Franking debit equal to excess]  

If:

(a) any dividends are paid on shares during the year of income; and

(b) the electing taxpayer is a company that held the shares or had interests in the shares; and

(c) the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and

(d) the election under section 160APHR related to the shares or interests; and

(e) the sum of the franking credits to which the electing taxpayer is entitled under this Part in respect of all those dividends exceeds the ceiling amount in relation to the fund in relation to the year of income;

there arises, at the end of the year of income, a franking debit of the company equal to the excess.

160AQZE(2)   [Sum of credits]  

If the electing taxpayer is entitled to both class A franking credits and class C franking credits under this Part in respect of any of the dividends referred to in subsection (1), the sum of the franking credits to which the taxpayer is entitled under this Part in respect of all the dividends referred to in that subsection is the sum of:

(a) the class C franking credits in respect of any of those dividends; and

(b) the amount worked out by using the formula:

The class A franking   credits in respect of     any of those dividends

×

39     61

×

64     36

160AQZE(3)   [Ceiling amount]  

The ceiling amount , in relation to the fund in relation to the year of income, is the notional total credit amount in relation to the fund in relation to the year of income increased by:

(a) if paragraph (b) does not apply - 20%; or

(b) if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined - that percentage.

160AQZE(4)   [Notional total credit amount]  

The notional total credit amount , in relation to the fund in relation to the year of income, is:

(a) subject to paragraph (b), an amount equal to the sum of the franking credits to which a taxpayer (the notional taxpayer ) of the same class or kind as the electing taxpayer would be entitled under this Part in respect of dividends on shares in the benchmark portfolio of shares that applies in respect of the fund (being shares that become ex dividend during the year of income) if:

(i) those dividends were paid to the notional taxpayer in the year of income; and

(ii) the notional taxpayer were a qualified person under section 160APHO in relation to those dividends; or

(b) if the regulations provide another method of calculating notional total credit amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included - the amount calculated in relation to the fund in accordance with that method.

160AQZE(5)   [Calculation - first acquisition]  

If the first acquisition of shares or interests in shares that are managed by or on behalf of the electing taxpayer as or in a particular discrete fund occurred during the year of income, the notional total credit amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income before the acquisition occurred.

160AQZE(6)   [Calculation - all shares and interests disposed of]  

If all the shares and interests in shares that were managed by or on behalf of the electing taxpayer as or in a particular discrete fund are disposed of during the year of income, the notional total credit amount in relation to the fund in relation to the year of income is to be worked out as if the year of income did not include the part of the year of income after the last disposal of any of the shares or interests occurred.

160AQZE(7)   [Regulations]  

The regulations may determine what constitutes a kind of taxpayer or class of taxpayers for the purposes of this section.