Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_3:p5
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 5/11)
Character Range: 98818–101701

recipient of indirect flow‑through

 (4) Where:
 (a) a *franked distribution *flows indirectly to an entity (the ultimate recipient); and
 (b) the distribution does not flow indirectly through the ultimate recipient to another entity; and
 (c) the distribution is *exempt income of the ultimate recipient; and
 (d) the distribution is not dealt with in section 207‑120; and
 (e) the ultimate recipient is not an *exempt institution that is eligible for a refund;
then:
 (f) the ultimate recipient is allowed:
 (i) where the distribution flows indirectly to the ultimate recipient as a partner in a *partnership or a beneficiary of a trust—a deduction from its assessable income; or
 (ii) where the distribution flows indirectly to the ultimate recipient under subsection 207‑35(4) as trustee of a trust—a reduction of its assessable income;
  of an amount worked out under Subdivision 207‑J; and
 (g) the ultimate recipient is not entitled to a *tax offset under subsection 207‑50(1) because of the distribution.

207‑115  When a franked distribution flows indirectly through an entity

 (1) This section sets out the only circumstances in which a *franked distribution is taken to flow indirectly through an entity in an income year.

 (2) A *franked distribution flows indirectly through a *partnership if:
 (a) the distribution is made to the partnership and *flows indirectly to a partner in the partnership; or
 (b) the distribution *flows indirectly to the partnership and to a partner in the partnership.

 (3) A *franked distribution flows indirectly through a trustee of a trust if the distribution is made to the trustee and *flows indirectly to:
 (a) a beneficiary of the trust, under subsection 207‑35(3); or
 (b) the trustee, under subsection 207‑35(4).

 (4) A *franked distribution flows indirectly through a trustee of a trust if:
 (a) the distribution *flows indirectly to the trustee because the trustee is either:
 (i) a beneficiary of another trust; or
 (ii) a partner in a partnership; and
 (b) the distribution flows indirectly:
 (i) to a beneficiary of the trust, under subsection 207‑35(3); or
 (ii) to the trustee, under subsection 207‑35(4).

207‑120  Gross‑up and tax offset allowed because of the character of the income

 (1) Where:
 (a) an entity makes a *franked distribution to another entity; and
 (b) the distribution is *exempt income of the recipient under:
 (i) section 282B, 283 or 297B of the Income Tax Assessment Act 1936 (certain income derived by an eligible entity within the meaning of Part IX of that Act); or
 (ii) paragraph 320‑35(1)(b) of this Act (segregated exempt assets) or subparagraph 320‑35(1)(f)(ii) of this Act (income bonds, funeral policies and scholarship plans);
the recipient is entitled to a *tax offset equal to the *franking credit on the distribution.

 (2) Where:
 (a) a *franked distribution *flows indirectly to