INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 2 - Franking surplus or deficit  

Subdivision B - General provisions on franking credits  

SECTION 160APQ   RECEIPT OF FRANKED DIVIDENDS THROUGH TRUSTS AND PARTNERSHIPS  

160APQ(1)   [Amount of class A franking credit]  

Subject to this section, where:


(a) a trust amount or partnership amount is included in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and


(b) there is a class A flow-on franking amount in relation to the trust amount or the partnership amount; and


(c) the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class A franking credit of the company equal to the amount calculated in accordance with the formula:

Graphic

where:

CR is the applicable general company tax rate; and

PR is the class A potential rebate amount in relation to the trust amount or partnership amount.

160APQ(1A)   [Amount of class B franking credit]  

Subject to this section, if:


(a) a trust amount or partnership amount is included in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and


(b) there is a class B flow-on franking amount in relation to the trust amount or the partnership amount;

there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class B franking credit of the company equal to the amount worked out using the formula:

Graphic

where:

`` Potential rebate amount '' means the class B potential rebate amount in relation to the trust amount or partnership amount;

`` Company tax rate '' means the applicable general company tax rate.

160APQ(2)   [Amount of class C franking credit]  

Subject to this section, if:


(a) a trust amount or partnership amount is included in, or a partnership amount is allowed as a deduction from, the assessable income of a company; and


(b) there is a class C flow-on franking amount in relation to the trust amount or the partnership amount; and


(c) the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

there arises, at the end of the year of income of the trustee or partnership to which the trust amount or partnership amount relates, a class C franking credit of the company equal to the amount worked out using the formula:

Graphic

where:

Potential rebate amount means the class C potential rebate amount in relation to the trust amount or partnership amount.

Company tax rate means the applicable general company tax rate.

160APQ(3)   [Assets held on behalf of shareholders]  

If:


(a) the company is a life assurance company; and


(b) the assets of the life assurance company to which the trust amount or partnership amount is attributable were included in the insurance funds of the life assurance company at any time during the period that:


(i) starts at the beginning of the year of income of the life assurance company in which the franking credit would arise but for this subsection; and

(ii) ends at the time when the franking credit would arise but for this subsection;

no franking credit arises under subsection (1), (1A) or (2) in relation to the trust amount or partnership amount unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.

160APQ(4)   [No franking credit arises]  

If a determination is made under paragraph 177EA(5)(b) in respect of the whole of a dividend or distribution represented by the trust amount or partnership amount, no franking credit arises under subsection (1), (1A) or (2) in respect of the dividend or distribution.

160APQ(5)   [Reduction]  

If a determination is made under paragraph 177EA(5)(b) in respect of a part of a dividend or distribution represented by the trust amount or partnership amount, the franking credit that would otherwise arise under subsection (1), (1A) or (2) in respect of the dividend or distribution is reduced by the same proportion as that part of the dividend or distribution bears to the whole of the dividend or distribution.

160APQ(6)   [Deemed payment of interest]  

A franking credit of a company does not arise under this section if:


(a) the trust amount or partnership amount was paid:


(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and


(b) the payment may reasonably be regarded as the payment of interest on a loan.

160APQ(7)   [Interpretation]  

In subsection (6):

commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid
: a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.

160APQ(8)   [Matters considered]  

In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:


(a) the way in which the amount was calculated; and


(b) the conditions applying to the payment of the amount; and


(c) any other relevant matters.


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