Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p13
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 13/19)
Character Range: 3784008–3786827

immediately after that time; or
 (ii) a *franking debit arising in the franking donor company's franking account under item 1 of the table in section 208‑145 immediately after that time.
Note: Subsection (8) ensures that the franking donor company's franking account has a nil balance immediately after the company becomes a former exempting entity and that there is an appropriate balance in the company's exempting account that is not made available for use by the NZ recipient company in franking distributions.

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

220‑350  Providing for a franking credit to arise
 (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.
 (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)).
 (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.
 (4) The table in subsection 205‑15(1) has effect subject to this section.

Effects of supplementary dividend from NZ franking company

220‑400  Gross‑up and tax offset for distribution from NZ franking company reduced by supplementary dividend
 (1) This section has effect if:
 (a) an *NZ franking company:
 (i) makes a *franked distribution to an entity (the recipient) in an income year; and
 (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New