Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

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Division 220 - Imputation for NZ resident companies and related companies  

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

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Effect of NZ franking company making distribution that is non-assessable and non-exempt

SECTION 220-350   Providing for a franking credit to arise  

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220-350(1)    
This section has effect if:


(a) an *NZ franking company makes a *franked distribution to a company (the receiving company ); and


(b) the distribution does not *flow indirectly through the receiving company to another entity; and


(c) because of section 768-5 , or section 23AI or 23AK of the Income Tax Assessment Act 1936 :


(i) all of the distribution is *exempt income, or is *non-assessable non-exempt income, in the hands of the receiving company; or

(ii) part of the distribution is exempt income, or is non-assessable non-exempt income, in the hands of the receiving company.
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220-350(2)    
A *franking credit arises in the receiving company ' s *franking account on the day on which the distribution is made.

Note:

If only part of the distribution is exempt income or non-assessable non-exempt income:

  • (a) a franking credit in relation to the distribution will arise under this section in relation to the part of the distribution that is exempt income, or that is non-assessable non-exempt income; and
  • (b) another franking credit in relation to the distribution will arise under item 3 of the table in subsection 205-15(1) in relation to the part of the distribution that is not exempt income, or that is not non-assessable non-exempt income (see also subsection 207-90(2) ).


    • 220-350(3)    
    The amount of the *franking credit that so arises is:


    (a) if subparagraph (1)(c)(i) applies - the amount of the franking credit on the distribution made by the *NZ franking company; or


    (b) if subparagraph (1)(c)(ii) applies - so much of the franking credit on the distribution made by the NZ franking company as is attributable to the part of the distribution referred to in that subparagraph.

    220-350(4)    
    The table in subsection 205-15(1) has effect subject to this section.

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