Income Tax Assessment Act 1997
You can deduct an amount for a *dividend paid to you by a company (the payment company ) if:
(a) you are:
(i) an individual, a *complying superannuation entity, a trust or a partnership; or
(ia) (Repealed by No 70 of 2015)
(ii) a *life insurance company where the dividend is in respect of *shares that are *complying superannuation assets; and
(b) when the dividend is paid, either you are an Australian resident or you are an individual who is a foreign resident and carries on business in Australia at or through your permanent establishment in Australia, being a permanent establishment within the meaning of:
(i) a double tax agreement (as defined in Part X of the Income Tax Assessment Act 1936 ) that relates to a foreign country and affects the individual; or
(ii) subsection 6(1) of that Act, if there is no such agreement; and
(ba) if, when the dividend is paid, you are an individual who is a foreign resident and has in Australia such a permanent establishment - the dividend is attributable to the permanent establishment; and
(c) all or some part of the dividend is reasonably attributable to a *LIC capital gain made by a *listed investment company; and
(d) in a case where the LIC capital gain was made by a company other than the payment company - the payment company was a listed investment company when it received a dividend part of which is attributable to the LIC capital gain.
The concession is available for LIC capital gains made directly by a listed investment company, and for LIC capital gains that company receives as a dividend through one or more other listed investment companies.
The amount you can deduct is:
(a) 50% of your share of the amount (the attributable part ) worked out under subsection (3) if you are an individual, a trust (except a trust that is a *complying superannuation entity) or a partnership; or
(b) 33 1/3 % of your share of the attributable part if you are a complying superannuation entity or a *life insurance company.
The listed investment company will advise you of your share of the attributable part.
If a shareholder in a listed investment company is a trust or partnership, a beneficiary of the trust or a partner in the partnership has no share of the attributable part.
The attributable part is worked out using this formula:
A listed investment company (which is not a base rate entity) disposes of a CGT asset for $30,000. The asset had a cost base of $10,000. The capital gain is therefore $20,000. The company applies a capital loss of $10,000 against the gain. Its net capital gain is $10,000.
The net capital gain is subject to tax at 30%. The after tax gain is therefore $7,000.
The company pays a fully franked dividend to Daryl, one of its shareholders. It advises Daryl that his share of the attributable part of the dividend is:
$7 + [ ($7 × 0.3) ÷ (1 - 0.3)] = $10
Daryl, being an individual, can deduct 50% of $10, which is $5.
An amount is included in your assessable income if:
(a) a deduction is allowed under subsection (1) to a trust or a partnership; and
(b) you are a beneficiary of the trust or a partner in the partnership and you are not an individual; and
(c) the income of the trust or partnership is reduced by an amount because of that deduction; and
(d) a part of the deduction (the reduction amount ) is reflected in your share of the net income of the trust or partnership. 115-280(5)
The amount included is:
(a) the reduction amount if you are a company, a trust (except a trust that is a *complying superannuation entity) or a partnership; or
(b) one-third of the reduction amount if you are a complying superannuation entity or a *life insurance company.
The Burnett Partnership received a dividend from a listed investment company. The dividend statement advised that the dividend included a $100 attributable part. The partnership deducted $50 under this section in calculating its net income.
The partnership has 2 equal partners, Amy Burnett and Burnett Consulting Pty Ltd.
Burnett Consulting ' s assessable income includes its share of the net income of the partnership plus $25 (being that part of the $50 deduction allowed to the partnership that is reflected in the company ' s share of the partnership net income).
Subsections (4) and (5) do not apply to Amy because she is an individual.