New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)
Schedule 30 The effect of a cum dividend sale or securities lending arrangement under the simplified imputation system
Income Tax Assessment Act 1997
1 After Division 215
Insert:
Division 216 - Cum dividend sales and securities lending arrangements
Table of Subdivisions
216-A Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else
216-B Statements to be made where there is a cum dividend sale or securities lending arrangement
Subdivision 216-A - Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else
Table of sections
216-1 When a distribution made to a member of a corporate tax entity is treated as having been made to someone else
216-5 First situation (cum dividend sales)
216-10 Second situation (securities lending arrangements)
216-15 Distribution closing time
216-1 When a distribution made to a member of a corporate tax entity is treated as having been made to someone else
There are 2 situations in which a *franked distribution, or a distribution *franked with an exempting credit, that is made to a *member of a *corporate tax entity is taken to have been made to another entity.
216-5 First situation (cum dividend sales)
(1) The first situation is one in which:
(a) the *corporate tax entity makes a *franked distribution, or a *distribution franked with an exempting credit, to a *member of the entity in respect of a *membership interest in the entity; and
(b) at the *distribution closing time, the member is under an obligation to transfer the membership interest to another person under a contract for the sale of the membership interest; and
(c) the contract:
(i) requires that the distribution be paid on to the other person; and
(ii) is entered into in the ordinary course of trading on an *approved stock exchange in Australia or elsewhere.
(2) The *distribution is taken to have been made to the other person as a *member of the entity (and not to the member).
Note: As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208.
(3) The *distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216-10.
216-10 Second situation (securities lending arrangements)
(1) The second situation is one in which:
(a) the *corporate tax entity makes a *franked distribution, or a *distribution franked with an exempting credit, to a *member of the entity in respect of a *membership interest in the entity; and
(b) at the time the distribution was made, the member was under an obligation to pay the distribution to another person under a *securities lending arrangement; and
(c) the obligation was incurred in the member's capacity as the borrower under the securities lending arrangement; and
(d) the *distribution closing time occurred during the borrowing period.
(2) The *distribution is taken to have been made to the other person as a *member of the entity (and not to the member).
Note: As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208.
(3) The distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216-5.
216-15 Distribution closing time
If *distributions by a *corporate tax entity are made to those *members who were members as at a particular time at or before the distribution is made, that time is the distribution closing time in relation to those distributions.
Subdivision 216-B - Statements to be made where there is a cum dividend sale or securities lending arrangement
Table of sections
216-20 Cum dividend sale - statement by securities dealer
216-25 Cum dividend sale - statement by party
216-30 Securities lending arrangements - statement by borrower
216-20 Cum dividend sale - statement by securities dealer
If:
(a) section 216-5 applies in relation to a *franked distribution or a *distribution franked with an exempting credit (cum dividend sales); and
(b) a *securities dealer has acted for a particular party to the contract concerned;
the securities dealer must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the *approved form setting out such information in relation to the distribution as is required by the approved form.
216-25 Cum dividend sale - statement by party
If:
(a) section 216-5 applies in relation to a *franked distribution or a *distribution franked with an exempting credit (cum dividend sales); and
(b) a particular party to the contract concerned has not had a *securities dealer acting for him or her;
that party must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the *approved form setting out such information in relation to the distribution as is required by the approved form.
216-30 Securities lending arrangements - statement by borrower
If section 216-10 (*securities lending arrangements) applies in relation to a *franked distribution, or a *distribution franked with an exempting credit, the borrower must, as soon as practicable after the making of the distribution, give to the lender a statement in the *approved form setting out such information in relation to the distribution as is required by the approved form.