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 B   Amendments of the Principal Act

87   Extra amount to be included in assessable income where franked dividend paid

Section 160AQT of the Principal Act is amended:

(a) by inserting in paragraph (1)(a) "class A" before "franked";
        

(b) by inserting "class A" before "franked" in the definition of the component "FA" in subsection (1);
        

(c) by inserting after subsection (1) the following subsection:
        

"(1AA) If:

(a) a class B franked dividend is paid in a year of income to a shareholder in a company; and

(b) the shareholder is:

(i) a natural person who is a resident at the time of payment of the dividend; or

(ii) a trustee; or

(iii) a partnership; or

(iv) a registered organization; and

(c) the dividend is not exempt income of the shareholder; and

(d) the dividend was not paid as part of a dividend stripping operation;

the assessable income of the shareholder of the year of income includes the amount worked out using the formula:

Franked amount * (Company tax rate / (1 - Company tax rate))

where:

'Franked amount' means the class B franked amount of the dividend;

'Company tax rate' means the applicable general company tax rate.";

(d) by inserting in paragraph (1A)(a) "class A" before "franked";
        

(e) by inserting "class A" before "franked" in the definition of the component "FA" in subsection (1A);
        

(f) by inserting after subsection (1A) the following subsection:
        

"(1B) If:

(a) a class B franked dividend is paid in a year of income to a shareholder in a company; and

(b) the shareholder is a life assurance company; and

(c) the dividend is not exempt income of the shareholder; and

(d) the dividend was not paid as part of a dividend stripping operation; and

(e) the assets of the shareholder from which the dividend was derived were included in insurance funds of the shareholder at any time during the period:

(i) starting at the beginning of the year of income of the shareholder in which the dividend was paid; and

(ii) ending at the time the dividend was paid;

the assessable income of the shareholder of the year of income includes the amount worked out using the formula:

Franked amount * (Company tax rate / (1 - Company tax rate))

where:

'Franked amount' means the class B franked amount of the dividend;

'Company tax rate' means the applicable general company tax rate.".