Private ruling: Frankable distribution and capital return
Date of advice: 10 July 2023
Published: 28 August 2023
Ruling period: 1 July 2022 to 30 June 2023
Date scheme commenced: In the income year ending 30 June 2023

Ruling: Q1: 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)? | A1: No. | Q2: 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)? | A2: No.

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: Summary: 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.