INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 220 - Imputation for NZ resident companies and related companies  

Subdivision 220-C - Modifications of other Divisions of this Part  

Effects of supplementary dividend from NZ franking company

SECTION 220-400   Gross-up and tax offset for distribution from NZ franking company reduced by supplementary dividend  

220-400(1)  
This section has effect if:


(a) an *NZ franking company:


(i) makes a *franked distribution to an entity (the recipient ) in an income year; and

(ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) to the recipient in connection with the franked distribution; and


(b) an amount is included in the recipient ' s assessable income for the income year under section 207-20 , and the recipient is entitled to a *tax offset for the income year under that section or section 207-110 ; and


(c) the recipient is entitled to a tax offset under Division 770 because of the inclusion of the *distribution in the recipient ' s assessable income for the income year.


(d) (Repealed by No 83 of 2004)

Reduced gross-up

220-400(2)  


The amount included in the recipient ' s assessable income under section 207-20 is reduced by the amount of the supplementary dividend (but not below zero). Reduced tax offset

220-400(3)  


The amount of the *tax offset under section 207-20 is reduced by the amount of the supplementary dividend (but not below zero). What happens if certain provisions apply

220-400(4)  


Subsections (2) and (3) do not apply to the recipient in relation to the *franked distribution if one or more of the following provisions also apply to the recipient in relation to the distribution:


(a) subsection 207-90(1) ;


(b) subsection 207-90(2) ;


(c) subsection 207-145(1) ;


(d) subsection 207-145(2) .

220-400(5)  


If subsection 207-90(2) or 207-145(2) would also apply to the recipient in relation to the *franked distribution, apply that subsection on the basis that:


(a) the amount of the *franking credit on the distribution;

had been reduced by:


(b) so much of the supplementary dividend as does not exceed that amount of the franking credit.

Relationship with sections 207-20, 207-90 and 207-145

220-400(6)  
Sections 207-20 , 207-90 and 207-145 have effect subject to this section.


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