Document ID: chunk:federal_register_of_legislation:C2010C00583:clause:10_1:p9
Version: federal_register_of_legislation:C2010C00583
Segment Type: clause
Provision Reference: sch 10 cl 1 (pt 9/13)
Character Range: 72127–74893

account of the credit.

Reduced gross‑up

 (2) The amount included in the recipient's assessable income is reduced by the amount of the supplementary dividend (but not below zero).

Reduced tax offset

 (3) The amount of the *tax offset is reduced by the amount of the supplementary dividend (but not below zero).

Amount of gross‑up and tax offset in case of manipulation

 (4) If subsection 207‑145(2) applies in relation to the recipient as the entity mentioned in that subsection, it has effect as if the amount of the *franking credit were equal to the amount of the *tax offset after reduction under subsection (3) of this section.

Note: Subsection 207‑145(2) reduces the amount included in an entity's assessable income, and the amount of the tax offset to which the entity is entitled, under section 207‑20 if the Commissioner determines that no franking credit benefit is to arise for part of a franked distribution to the entity.

Relationship with sections 207‑20 and 207‑145

 (5) Sections 207‑20 and 207‑145 have effect subject to this section.

220‑405  Deduction and reduced tax offset for franked distribution and supplementary dividend flowing indirectly

 (1) This section has effect if:
 (a) an *NZ franking company:
 (i) makes a *franked distribution; and
 (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) in connection with the franked distribution; and
 (b) the franked distribution and the supplementary dividend *flow indirectly to an entity (the recipient) in an income year because the recipient is a partner in a partnership or a beneficiary or trustee of a trust; and
 (c) the recipient is entitled under section 207‑50 to a *tax offset in connection with the *distribution; and
 (d) the recipient is entitled under section 160AF (Credits in respect of foreign tax) of the Income Tax Assessment Act 1936 to a credit for the income year because of the distribution; and
 (e) the recipient's income tax for the income year is reduced to some extent on account of the credit.

 (2) The supplementary dividend flows indirectly to an entity if, had the supplementary dividend been a *franked distribution, it would have *flowed indirectly to the entity under section 207‑35.

Deduction for recipient

 (3) The recipient can deduct for the income year the amount worked out using the formula:

Amount of recipient's tax offset

 (4) Work out the amount of the recipient's *tax offset using the formula:
However, the amount of the tax offset is nil if the amount of the supplementary dividend is greater than the amount of the franking credit on the franked distribution.

Reduction of amount on which trustee recipient is assessed

 (5) If the recipient:
 (a) is the trustee of a