Document ID: chunk:federal_register_of_legislation:C2025C00029:section:14:p11
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 14 (pt 11/14)
Character Range: 3516105–3518812

the extent that an amount of the franked distribution remained after reducing it by deductions that were directly relevant to it); and
 (ii) the *net income of the trust estate for that income year (disregarding the amount of any *franking credits), divided by the sum mentioned in subsection (2); and

207‑45  Tax offset—distribution flows indirectly to an entity
  An entity to whom a *franked distribution *flows indirectly in an income year is entitled to a *tax offset for that income year that is equal to its *share of the *franking credit on the distribution, if it is:
 (a) an individual; or
 (b) a *corporate tax entity when the distribution flows indirectly to it; or
 (c) the trustee of a trust that is liable to be assessed on a share of, or all or a part of, the trust's *net income under section 98, 99 or 99A of the Income Tax Assessment Act 1936 for that income year; or
 (d) the trustee of a *complying superannuation entity, a *non‑complying superannuation fund or a *non‑complying approved deposit fund in relation to that income year.
Note: The entities covered by this section are the ultimate recipients of the distribution because the distribution does not flow indirectly through them to other entities. As a result they are also the ultimate taxpayers in respect of the distribution and are given the tax offset to acknowledge the income tax that has already been paid on the profits underlying the distribution.

Key concepts

207‑50  When a franked distribution flows indirectly to or through an entity
 (1) For the purposes of this Subdivision, this section sets out the only circumstances in which a *franked distribution:
 (a) flows indirectly to an entity (subsection (2), (3) or (4)); or
 (b) flows indirectly through an entity (subsection (5)).

Partners
 (2) A *franked distribution flows indirectly to a partner in a partnership in an income year if, and only if:
 (a) during that income year, the distribution is made to the partnership, or *flows indirectly to the partnership as a beneficiary because of a previous application of subsection (3); and
 (b) the partner has an individual interest:
 (i) in the partnership's *net income for that income year that is covered by paragraph 92(1)(a) or (b) of the Income Tax Assessment Act 1936; or
 (ii) in a *partnership loss of the partnership for that income year that is covered by paragraph 92(2)(a) or (b) of that Act;
  (whether or not that individual interest becomes assessable income in the hands of the partner); and
 (c) the partner's *share of the distribution under section 207‑55 is a positive amount (whether or not the partner actually receives any of that share).

Beneficiaries
 (3) A *franked distribution