INCOME TAX ASSESSMENT ACT 1997 - SECT 207.145 Distribution that is made to an entity

INCOME TAX ASSESSMENT ACT 1997 - SECT 207.145

Whole of distribution manipulated

  (1)   If a * franked distribution is made to an entity in one or more of the following circumstances:

  (a)   the entity is not a qualified person in relation to the distribution for the purposes of Division   1A of former Part   IIIAA of the Income Tax Assessment Act 1936 ;

  (b)   the Commissioner has made a determination under paragraph   177EA(5)(b) of that Act that no imputation benefit (within the meaning of that section) is to arise in respect of the distribution for the entity;

  (c)   the Commissioner has made a determination under paragraph   204 - 30(3)(c) of this Act that no * imputation benefit is to arise in respect of the distribution for the entity;

  (d)   the distribution is made as part of a * dividend stripping operation;

  (da)   the distribution is one to which section   207 - 157 (which is about distribution washing) applies;

  (db)   the distribution is one to which section   207 - 158 (which is about foreign income tax deductions) applies;

then, for the purposes of this Act:

  (e)   the amount of the * franking credit on the distribution is not included in the assessable income of the entity under section   207 - 20 or 207 - 35; and

  (f)   the entity is not entitled to a * tax offset under this Division because of the distribution; and

  (g)   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.

Part of share of distribution manipulated

  (2)   If:

  (a)   a * franked distribution is made to an entity; and

  (b)   the Commissioner makes a determination under paragraph   177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution (the specified part ) for the entity;

then, for the purposes of this Act:

  (c)   the amount of the distribution is taken to have been reduced by the specified part; and

  (d)   the amount of the * franking credit on the distribution is to be worked out as follows:

Example:   A franked distribution of $70 is made to the trustee of a trust. Apart from this section, the franking credit on the distribution ($30) would be included in the assessable income of the trust under section   207 - 35.

  The Commissioner has made a determination under paragraph   177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise for the trustee in respect of $49 of the distribution.

  Under this subsection, the amount included in the assessable income of the trust under section   207 - 35 because of the distribution is reduced from $30 to $9.

  If there is a beneficiary of the trust that is presently entitled to the trust's income, the amount of the distribution that flows indirectly to the beneficiary is reduced from $70 to $21 under this subsection.

What happens if both subsection   207 - 90(2) and subsection   (2) of this section would apply

  (3)   If, apart from this subsection, both subsection   207 - 90(2) and subsection   (2) of this section would apply to an entity in relation to a * franked distribution, then:

  (a)   apply subsection   207 - 90(2) first; and

  (b)   apply subsection   (2) of this section on the basis that the amount of the * franked distribution had been reduced under subsection   207 - 90(2).