Document ID: chunk:federal_register_of_legislation:C2025C00014:section:46fa:p2
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 46FA (pt 2/2)
Character Range: 292991–295101

(5) Part 3‑6 of the Income Tax Assessment Act 1997 (the imputation system) applies to the unfranked amount of the flow‑on dividend as if it were an unfrankable distribution within the meaning of section 202‑45 of that Act if a deduction is allowed to the resident company in relation to the flow‑on dividend.

Wholly owned by non‑resident company
 (6) The resident company is wholly owned by the non‑resident company if all the shares in the resident company are held by and beneficially owned by the non‑resident company.
 (7) However, the company is not wholly owned by the non‑resident company if a person is in a position to affect rights, in relation to the resident company, of the non‑resident company.
 (8) The resident company is also not wholly owned by the non‑resident company if at some future time a person will be in a position to affect rights as described in subsection (7).

A person in a position to affect rights
 (9) A person is in a position to affect rights of a company in relation to another company if the person has a right, power or option:
 (a) to acquire those rights from one or other of those companies; or
 (b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights.
 (10) It does not matter whether the person has the right, power or option because of the constitution of one or other of those companies, any agreement or otherwise.

Definitions
 (11) In this section:
fully‑franked dividend means a dividend whose franking percentage (within the meaning of section 203‑35 of the Income Tax Assessment Act 1997) is 100%.
group company has the same meaning as in former section 160AFE as in force immediately before 1 July 2002.
non‑portfolio dividend has the same meaning as in section 317.
non‑resident company means a company that is not a resident.
unfranked amount of a dividend (including an unfrankable distribution within the meaning of section 202‑45 of the Income Tax Assessment Act 1997) means the amount of the dividend less the franked part.