Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 204 - Anti-streaming rules  

Subdivision 204-C - Substituting tax-exempt bonus share for franked distributions  

Operative provisions

SECTION 204-25   Substituting tax-exempt bonus shares for franked distributions  

Franking debit arises if tax-exempt bonus shares are issued in substitution for a franked distribution

204-25(1)    
This section gives rise to a *franking debit in an entity ' s *franking account if:

(a) the exercise of a choice or selection by a *member of the entity; or

(b) the member ' s failure to exercise a choice or selection;

has the effect of determining (to any extent) that the entity issues one or more *tax-exempt bonus shares, to that member or another member of the entity, in substitution (in whole or in part) for one or more *franked distributions by the entity to that member or another member.

Amount of the debit

204-25(2)    
The debit is equal to the one that would arise in the entity ' s *franking account if the entity made a *distribution, equal to the *franked distributions referred to in subsection (1), franked at the entity ' s *benchmark franking percentage for the *franking period in which the shares are issued.

When does the debit arise

204-25(3)    
The debit arises on the day when the shares are issued.

Meaning of tax-exempt bonus share

204-25(4)    

For a company whose *shares have no par value, tax-exempt bonus share means a share issued by the company in the circumstances mentioned in subsection 6BA(6) of the Income Tax Assessment Act 1936 .

204-25(5)    

For any other company, tax-exempt bonus share means a *share issued by the company to a *shareholder in the company where:

(a) the amount or value of the share is debited against an amount standing to the credit of a share premium account of the company; and

(b) no part of the paid-up value of the share is a dividend; and

(c) the share is issued:

(i) as a bonus share; or

(ii) in the circumstances mentioned in subsection 6BA(1) of the Income Tax Assessment Act 1936 , as in force immediately before 1 July 1998.

Where a company has no benchmark franking percentage for the franking period

204-25(6)    

If a company has no *benchmark franking percentage for the *franking period in which the *tax-exempt bonus share is issued, this section applies as if the entity had a benchmark franking percentage of 100% for that period.