Taxation Laws Amendment Act (No. 3) 1993 (118 of 1993)

Part 4   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 9   Amendments relating to dividend imputation

Subdivision C   Application and transitional provisions

111   Transitional-receipt of class A franked dividends or class B franked dividends etc. by a corporate shareholder before the start of the shareholder's 1994-95 franking year

 

(1) Subject to subsection (3), if:
        

(a) a class A franked dividend or a class B franked dividend is paid to a shareholder being a company; and
        

(b) the dividend is paid on a day (the "actual payment day") during:
        

(i) the period beginning on 1 January 1994 and ending on 30 June 1994; and
        

(ii) a franking year of the shareholder earlier than the shareholder's 1994-95 franking year; and
        

(c) assuming that the amendments of Divisions 1 and  2 of Part IIIAA of the Principal Act made by this Division had applied in relation to franking credits of the shareholder arising in that earlier franking year, there would have arisen on the actual payment day a class A franking credit or a class B franking credit of the shareholder under section 160APP of the amended Act in respect of the payment of the dividend;
        

then:

(d) in the case of a class A franked dividend-Part IIIAA of the Principal Act applies as if the class A franked dividend were a franked dividend; and
        

(e) in the case of a class B franked dividend-Part IIIAA of the amended Act applies as if the class B franking credit arises at the beginning of the shareholder's 1994-95 franking year instead of on the actual payment day.
        

      

(2) Subject to subsection (3), 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) assuming that the amendments of Divisions 1 and  2 of Part IIIAA of the Principal Act made by this Division had applied in relation to franking credits of the company arising in a franking year of the company earlier than the company's 1994-95 franking year, there would have arisen at a particular time (the "actual credit time") during:
        

(i) the period beginning on 1 January 1994 and ending on 30 June 1994; and
        

(ii) that earlier franking year;
        

a class A franking credit, or a class B franking credit, of the company under section 160APQ of the amended Act in respect of the trust amount or partnership amount, as the case may be;

then:

(c) in the case of a class A franking credit-Part IIIAA of the Principal Act applies as if the class A franked amount of the dividend to which the trust amount or partnership amount is attributable were a franked amount; and
        

(d) in the case of a class B franking credit-Part IIIAA of the amended Act applies as if that class B franking credit arises at the beginning of the company's 1994-95 franking year instead of at the actual credit time.
        

      

(3) If:
        

(a) apart from this subsection, Part IIIAA of the amended Act applies, because of this section, as if one or more class B franking credits arose at the beginning of the 1994-95 franking year of a company; and
        

(b) the company has, or would, apart from this subsection, have a franking deficit at the end of the 1993-94 franking year of the company;
        

the following provisions have effect:

(c) if the sum of those class B franking credits does not exceed 130% of the franking deficit-each of those class B franking credits is to be:
        

(i) reduced by 23%; and
        

(ii) treated, for the purposes of Part IIIAA of the Principal Act, as if it were a franking credit arising on the last day of the 1993-94 franking year of the company; and
        

(iii) taken, for the purposes of Part IIIAA of the amended Act, not to be a class B franking credit arising at the beginning of the 1994-95 franking year of the company;
        

(d) if the sum of those class B franking credits exceeds 130% of the class B franking deficit:
        

(i) so much of each of those class B franking credits as is calculated using the formula:
        

Franking credit * (130% franking deficit / Total franking credits)

where:

"Franking credit" means the amount of the class B franking credit;

"130% franking deficit" is the number of dollars in 130% of the franking deficit;

"Total franking credits" means the number of dollars in the sum of those class B franking credits;

(which amount so calculated is in this paragraph called the "proportional franking credit") is to be:

(A) reduced by 23%; and
        

(B) treated, for the purposes of Part IIIAA of the Principal Act, as if it were a franking credit arising on the last day of the 1993-94 franking year of the company; and
        

(C) taken, for the purposes of Part IIIAA of the amended Act, not to be a class B franking credit arising at the beginning of the 1994-95 franking year of the company; and
        

(ii) so much of each of those class B franking credits as remains after subtracting the proportional franking credit is taken, for the purposes of Part IIIAA of the amended Act, to arise at the beginning of the 1994-95 franking year of the company.
        

      

(4) A reference in this section to Part IIIAA of the amended Act does not include a reference to section 160AR of the amended Act.