Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p24
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 24/34)
Character Range: 3584145–3587002

to whom the distribution *flows indirectly if:
 (a) all or a part of the entity's individual interest or share amount in relation to the distribution that is mentioned in subsection 207‑50(2), (3) or (4) could reasonably be regarded as the payment of interest on a loan, having regard to:
 (i) the way in which that individual interest or share amount was calculated; and
 (ii) the conditions applying to the payment or application of that individual interest or share amount; and
 (iii) any other relevant matters; and
 (b) the entity's interest in the last intermediary entity (see subsection (2)):
 (i) was acquired, or was acquired for a period that was extended, at or after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997; or
 (ii) was acquired as part of a *financing arrangement for the entity (including an arrangement extending to an earlier arrangement) that was entered into at or after that time.
 (2) The entity's interest in the last intermediary entity is:
 (a) if the distribution *flows indirectly to the entity as a partner in a partnership under subsection 207‑50(2)—the entity's interest in the partnership; or
 (b) if the distribution flows indirectly to the entity as a beneficiary of a trust under subsection 207‑50(3)—the entity's interest in the trust; or
 (c) if the distribution flows indirectly to the entity as the trustee of a trust under subsection 207‑50(4)—the entity's interest in the trust in respect of which the entity is liable to be assessed.

Division 208—Exempting entities and former exempting entities

Table of Subdivisions
 Guide to Division 208
208‑A What are exempting entities and former exempting entities?
208‑B Franking with an exempting credit
208‑C Amount of the exempting credit on a distribution
208‑D Distribution statements
208‑E Distributions to be franked with exempting credits to the same extent
208‑F Exempting accounts and franking accounts of exempting entities and former exempting entities
208‑G Tax effects of distributions by exempting entities
208‑H Tax effect of a distribution franked with an exempting credit

Guide to Division 208

Table of sections
208‑5 What is an exempting entity?
208‑10 Former exempting entities
208‑15 Distributions by exempting entities and former exempting entities

208‑5  What is an exempting entity?
 (1) An exempting entity is a corporate tax entity that is effectively owned by entities that, either because they are not Australian residents or because they receive distributions as exempt income or non‑assessable non‑exempt income, would not be able to fully utilise franking credits on distributions by the corporate tax entity.
 (2) In deciding whether a corporate tax entity is effectively owned by such entities, these rules:
 (a) look at the membership interests in the entity that involve the holder of the interest in