New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 5   Consolidation: imputation rules

Income Tax Assessment Act 1997

5   Before Subdivision 719-J

Insert:

Subdivision 719-H - Imputation issues

719-425 Guide to Subdivision 719-H

This Subdivision deals with some imputation issues in relation to MEC groups.

Table of sections

Operative provisions

719-430 Transfer of franking account balance on cessation event

719-435 Distributions by subsidiary members of MEC group taken to be distributions by head company

[This is the end of the Guide.]

Operative provisions

719-430 Transfer of franking account balance on cessation event

(1) This section operates if:

(a) a *cessation event happens to the *provisional head company of a *MEC group (the former head company ); and

(b) another company (the new head company ) is appointed as the provisional head company of the group under subsection 719-60(3).

(2) When the new head company is appointed:

(a) the *franking account of the former head company ceases to operate; and

(b) the new head company has a franking account; and

(c) any *franking surplus or *franking deficit in the franking account of the former head company just before the *cessation event happened becomes that of the new head company.

719-435 Distributions by subsidiary members of MEC group taken to be distributions by head company

(1) Part 3-6 operates as if a *frankable distribution made by an *eligible tier-1 company that:

(a) is a member of a *MEC group; and

(b) is not the *provisional head company of the group;

had been made by the provisional head company of the group to a *member of the provisional head company.

Note: Part 3-6 deals with imputation.

(2) Part 3-6 operates as if a *frankable distribution made by a *subsidiary member of a *MEC group (the foreign-held subsidiary ) that is not an *eligible tier-1 company were a frankable distribution made by the *head company of the group to a *member of the head company if:

(a) the foreign-held subsidiary meets the set of requirements in section 703-45, section 701C-10 of the Income Tax (Transitional Provisions) Act 1997 or section 701C-15 of that Act; and

(b) the frankable distribution is made to a foreign resident.