INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 2A - Exempting companies and former exempting companies  

SECTION 160AQCNF   RECEIPT OF EXEMPTED DIVIDENDS BY FORMER EXEMPTING COMPANIES OR BY EXEMPTING COMPANIES  

160AQCNF(1)   [Class A exempted dividend]  

Subject to this section, if, on a particular day, a class A exempted dividend is paid to a former exempting company, or to an exempting company, that is a resident at the time the dividend is paid, there arises on that day a class A exempting credit of the former exempting company or a class A franking credit of the exempting company, as the case may be, equal to the class A exempted amount of the dividend.

160AQCNF(2)   [Class C exempted dividend]  

Subject to this section, if, on a particular day, a class C exempted dividend is paid to a former exempting company, or to an exempting company, that is a resident at the time the dividend is paid, there arises on that day a class C exempting credit of the former exempting company or a class C franking credit of the exempting company, as the case may be, equal to the class C exempted amount of the dividend.

160AQCNF(3)   [Where wholly exempt income]  

No exempting credit or franking credit arises if the dividend is wholly exempt income of the company.

160AQCNF(4)   [Certain determinations]  

If a determination is made under paragraph 160AQCBA(3)(b) or 177EA (5)(b) in respect of the dividend, no exempting credit or franking credit arises in respect of the dividend.

160AQCNF(5)   [Para 177EA(5)(b) determination]  

If a determination is made under paragraph 177EA(5)(b) in respect of a part of the dividend, the exempting credit or 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.

160AQCNF(6)   [Where dividend partly exempt]  

If the dividend is partly exempt income of the company, the exempting credit or franking credit arising under subsection (1) or (2) is reduced by the amount worked out by using the formula:


Credit   ×     Exempt part of dividend    
      Dividend

where:

credit
means the exempting credit or franking credit, as the case may be, determined under whichever of subsections (1) and (2) is applicable.

dividend
means the number of dollars in the total amount of the dividend.

exempt part of dividend
means the number of dollars in the part of the dividend that is exempt income.

160AQCNF(7)   [Determining whether wholly or partly exempt]  

In determining for the purposes of subsection (3) or (6) whether the dividend is wholly or partly exempt income of the former exempting company or of the exempting company, section 124ZM (which exempts dividends paid by PDFs) is to be disregarded.

160AQCNF(8)   [Life assurance companies]  

No franking credit arises under subsection (1) or (2) in relation to an exempted dividend if:


(a) the exempted dividend is paid to:


(i) a former exempting company; or

(ii) an exempting company;
that is a life assurance company; and


(b) the assets of the company from which the dividend was derived were included in the insurance funds of the company at any time during the period that:


(i) starts at the beginning of the year of income of the company in which the dividend was paid; and

(ii) ends at the time when the dividend was paid;

unless at all times when those assets were included in the insurance funds of the company during that period they were held on behalf of the company's shareholders.

160AQCNF(9)   [Dividend stripping operations]  

No exempting credit or franking credit arises if the dividend was paid as part of a dividend stripping operation.


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