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Edited version of private advice
Authorisation Number: 1052136773643
Date of advice: 10 July 2023
Ruling
Subject: Frankable distribution and capital return
Question 1
Will the dividend distribution from HoldCo to Foreign Co be 'unfrankable' pursuant to section 202-45 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No.
Question 2
Will Hold Co be required to give a copy of the Commissioner's determination to Foreign Co under paragraph 45D(1A)(b) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
No.
This ruling applies for the following period:
1 July 2022 to 30 June 2023
The scheme commenced:
In the income year ending 30 June 2023
Relevant facts and circumstances
Hold Co is a company incorporated in Australia. It is wholly owned by Foreign Co, a company incorporated in a foreign country.
Due to its unique circumstances, Hold Co proposes to conduct a share capital reduction and distribute its profits to Foreign Co as a dividend.
The share capital account of Hold Co is not tainted within the meaning of Division 197 of the ITAA 1997.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 45B
Income Tax Assessment Act 1936 paragraph 45D(1A)(b)
Income Tax Assessment Act 1997 section 202-45
Reasons for decision
The dividend distribution will not be unfrankable due to the requirements of section 202-45 of the ITAA 1997 are not satisfied.
As the Commissioner will not make a determination under section 45B of the ITAA 1936, paragraph 45D(1A)(b) of the ITAA 1936 will not apply.