INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 1AA - Interpretative provisions relating to exempting companies and former exempting companies  

SECTION 160APHBJ   ELIGIBLE CONTINUING SUBSTANTIAL SHAREHOLDERS  

160APHBJ(1)   [Definition]  

A shareholder is an eligible continuing substantial shareholder in relation to a dividend paid by a former exempting company (the relevant former exempting company ) if the following provisions apply.

160APHBJ(2)   [Relevant times]  

At both of the following times:

(a) the time when the dividend was paid; and

(b) the time immediately before the relevant former exempting company ceased to be an exempting company;

the shareholder:

(c) was entitled to not less than the prescribed percentage of:

(i) if the voting shares (as defined in the Corporations Act 2001 ) in the relevant former exempting company are not divided into classes - those voting shares; or

(ii) if the voting shares (as so defined) in the relevant former exempting company are divided into 2 or more classes - the shares in one of those classes; and

(d) was a person referred to in one or more of the following subparagraphs:

(i) a non-resident; or

(ii) a life assurance company; or

(iii) an exempting company; or

(iv) a former exempting company; or

(v) a trustee of a trust in which an interest was held by a person referred to in any of subparagraphs (i) to (iv); or

(vi) a partnership in which an interest was held by a person referred to in any of subparagraphs (i) to (iv).

160APHBJ(3)   [Exemption or entitlement]  

If the assumptions set out in subsection (4) are made:

(a) if the shareholder was a person referred to in any of subparagraphs (2)(d)(i) to (iv) - the shareholder; or

(b) if the shareholder was a trustee of a trust or a partnership, being a trust or partnership in which a person referred to in any of those subparagraphs held an interest - the holder of the interest;

would (if a non-resident) be exempt from dividend withholding tax on the dividend or (if a resident) be entitled to a franking credit or a franking rebate in respect of the dividend.

160APHBJ(4)   [Assumptions]  

The assumptions referred to in subsection (3) are that:

(a) the relevant former exempting company was an exempting company at the time it paid the dividend; and

(b) the dividend was a franked dividend paid to the shareholder; and

(c) if the shareholder was a former exempting company - the shareholder was an exempting company; and

(d) if the shareholder was a trustee of a trust or partnership in which a former exempting company had an interest - that former exempting company was an exempting company.

160APHBJ(5)   [Determination of entitlement]  

The question whether a person was entitled at a particular time to not less than the prescribed percentage of voting shares or a class of voting shares in a company is to be determined in the same way as that question is determined under subsection 708(5) of the Corporations Act 2001 .

160APHBJ(6)   [Holding of interest in trust]  

A person is taken to hold an interest in a trust if:

(a) the person is a beneficiary under the trust; or

(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the trustee.

160APHBJ(7)   [Holding of interest in partnership]  

A person is taken to hold an interest in a partnership if:

(a) the person is a partner in the partnership; or

(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the partnership.