Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_3:p8
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 8/11)
Character Range: 106566–109357

(a) the receiving entity is not a qualified person in relation to the distribution for the purposes of Division 1A of Part IIIAA of the Income Tax Assessment Act 1936;
 (b) the Commissioner has made a determination under paragraph 204‑30(3)(b) that no *imputation benefit is to arise for the receiving entity in respect of the distribution;
 (c) the distribution is made as part of a *dividend stripping operation;
 (d) the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of the distribution to the entity;
then:
 (e) the *franking credit on the distribution is not included in the assessable income of the entity under subsection 207‑20(1); and
 (f) the receiving entity is not entitled to a *tax offset under subsection 207‑20(2) as a result of the distribution.

 (2) If the Commissioner makes a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of a specified part of a *franked distribution to an entity, the amount included in the assessable income of the entity under subsection 207‑20(1), and the *tax offset to which the entity is entitled under subsection 207‑20(2), is worked out using the formula:

207‑150  Gross‑up and tax offset are denied where there is manipulation of the imputation system—distribution flowing indirectly

 (1) Where a *franked distribution *flows indirectly to an entity in one or more of the following circumstances:
 (a) the entity is not a qualified person in relation to the distribution for the purposes of Division 1A of Part IIIAA of the Income Tax Assessment Act 1936;
 (b) the Commissioner has made a determination under paragraph 204‑30(3)(b) that no *imputation benefit is to arise for the entity in respect of the distribution;
 (c) the distribution is made as part of a *dividend stripping operation;
 (d) the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of the distribution in the hands of the entity, or an entity through which the distribution flows indirectly to that entity;
 (e) the distribution is treated as an interest payment under section 207‑160, 207‑165 or 207‑170;
then:
 (f) the entity is allowed:
 (i) where the distribution flows indirectly to the entity 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 entity under subsection 207‑35(4) as trustee of a trust—a reduction of its assessable income;