INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 1 - Interpretation  

SECTION 160APAAAA   CERTAIN NON-SHARE DIVIDENDS BY ADIs NOT FRANKABLE  

160APAAAA(1)   [Non-share dividend not frankable]  

A non-share dividend paid by an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 is not a frankable dividend if:

(a) the ADI is a resident of Australia; and

(b) the non-share dividend is paid in respect of a non-share equity interest that:

(i) by itself; or

(ii) in combination with one or more schemes that are related schemes (within the meaning of the Income Tax Assessment Act 1997 ) to the scheme under which the interest arises;

forms part of the ADI's Tier 1 capital either on a solo or consolidated basis (within the meaning of the prudential standards); and

(c) the non-share equity interest is issued at or through a permanent establishment of the ADI in a broad-exemption listed country (within the meaning of Part X); and

(d) the funds from the issue of the non-share equity interest are raised and applied solely for one or more permitted purposes (see subsection (2)) in relation to the non-share equity interest.

160APAAAA(2)   [Permitted purposes]  

The permitted purposes in relation to the non-share equity interest (the relevant interest ) are the following:

(a) the purpose of the business of the ADI carried on at or through the permanent establishment other than the transfer of funds directly or indirectly to:

(i) the Australian head office of the permanent establishment; or

(ii) any connected entity of the ADI that is a resident of Australia; or

(iii) a permanent establishment of the ADI, or of a connected entity of the ADI, located in Australia;

(b) the purpose of redeeming:

(i) a debt interest; or

(ii) a non-share equity interest;

that is issued, before the relevant interest is issued, at or through the permanent establishment and is held by a connected entity of the ADI that is a resident of Australia;

(c) the purpose of returning funds to:

(i) the Australian head office of the permanent establishment; or

(ii) a permanent establishment of the ADI or of a connected entity of the ADI, located in Australia;

if the funds are contributed, before the relevant interest is issued, for use in the business of the ADI carried on at or through the permanent establishment.