Taxation Laws Amendment Act (No. 4) 2003 (66 of 2003)

Schedule 4   Refundable tax offset rules

Income Tax Assessment Act 1997

2   Subsections 67-25(1) to (1C)

Repeal the subsections, substitute:

Franked distributions

(1) *Tax offsets available under Division 207 (which sets out the effects of receiving a *franked distribution) or Subdivision 210-H (which sets out the effects of receiving a *distribution *franked with a venture capital credit) are subject to the refundable tax offset rules, unless otherwise stated in this section.

(1A) Where the trustee of a *non-complying superannuation fund or a *non-complying ADF is entitled to a *tax offset under Division 207 because a *franked distribution is made to, or *flows indirectly to, the trustee, the tax offset is not subject to the refundable tax offset rules.

(1B) Where:

(a) a trustee is entitled to a *tax offset under Division 207 because a *franked distribution *flows indirectly to the trustee in circumstances described in subsection 207-35(4) (which deals with trustees who are liable to be assessed on the net income of a trust under section 98, 99 or 99A of the Income Tax Assessment Act 1936); and

(b) the trustee is liable to be assessed under section 98 or 99A of the Income Tax Assessment Act 1936 on a share of the net income of the trust estate that is, in whole or in part, attributable to the distribution;

the tax offset is not subject to the refundable tax offset rules.

(1C) Where a *corporate tax entity is entitled to a *tax offset under Division 207 because a *franked distribution is made to the entity, the tax offset is not subject to the refundable tax offset rules unless:

(a) the entity is an *exempt institution that is eligible for a refund; or

(b) the entity is a *life insurance company and the *membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:

(i) starting at the beginning of the income year of the company in which the distribution is made; and

(ii) ending when the distribution is made.

(1D) Where a *corporate tax entity is entitled to a *tax offset under Division 207 because a *franked distribution *flows indirectly to the entity, the tax offset is not subject to the refundable tax offset rules unless:

(a) the entity is an *exempt institution that is eligible for a refund; or

(b) the entity is a *life insurance company and the company's interest in the *membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:

(i) starting at the beginning of the income year of the company in which the distribution is made; and

(ii) ending when the distribution is made.

(1E) Where a *corporate tax entity is entitled to a *tax offset under Subdivision 210-H because a *distribution *franked with a venture capital credit is made to the entity, the tax offset is not subject to the refundable tax offset rules unless:

(a) the entity is a *life insurance company; and

(b) the *membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:

(i) starting at the beginning of the income year of the company in which the distribution is made; and

(ii) ending when the distribution is made.