Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p19
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 19/34)
Character Range: 3571752–3574437

trust under subsection 207‑50(4), the entity's share amount in relation to the distribution that is mentioned in that subsection is to be reduced by the lesser of:
 (a) that share amount; and
 (b) its *share of the *franking credit on the distribution.

Part of share of distribution manipulated
 (5) If:
 (a) a *franked distribution *flows indirectly to an entity in an income year; and
 (b) the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution (the specified part) for the entity;
then, subsection (2), (3) or (4) (as appropriate) applies to the entity on the basis that the amount of its *share of the *franking credit on the distribution is worked out as follows:
 (6) In addition, the following apply to an entity covered by subsection (5):
 (a) if the distribution would otherwise *flow indirectly through the entity—the entity's *share of the distribution for the purposes of this Act (other than subsection (2), (3) or (4)) is to be reduced by the specified part mentioned in subsection (5);
 (b) if the entity would otherwise be entitled to a *tax offset under this Division because of the distribution—the amount of the tax offset is to be worked out as follows:
Example: X is a partner in a partnership to which a franked distribution of $140 is made. The franking credit on the distribution ($60) is included in the assessable income of the partnership under section 207‑35. X's share of the distribution is $70 and its share of the franking credit on the distribution is $30.
 The Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise for X in respect of $42 of the distribution.
 Under subsection (5), X will be allowed a deduction of $18.
 X is the trustee of a trust and the distribution will flow indirectly through X to beneficiaries of the trust. For the purposes of working out a beneficiary's share of the distribution and its share of the franking credit, X's share of the franked distribution is reduced to $28 under this subsection.

What happens if both subsection 207‑95(1) and subsection (1) of this section would apply
 (7) If, apart from this subsection, both subsection 207‑95(1) and subsection (1) of this section would apply to an entity in relation to a *franked distribution, then:
 (a) subsection (1) of this section applies to the entity; but
 (b) subsection 207‑95(1) does not apply to the entity.

What happens if both subsection 207‑95(5)