Document ID: chunk:federal_register_of_legislation:C2007A00079:clause:6_3
Version: federal_register_of_legislation:C2007A00079
Segment Type: clause
Provision Reference: sch 6 cl 3
Character Range: 34961–35715

3  Subsection 197‑50(1) (note)
Repeal the note, substitute:

Note: If a company's share capital account is tainted, then a distribution from the account is taxed as a dividend in the hands of the shareholder. This is because a tainted share capital account does not count as a share capital account for the purposes of paragraph (d) of the definition of dividend in subsection 6(1) of the Income Tax Assessment Act 1936 (see subsection 975‑300(3) of this Act). However, although the distribution is taxed as a dividend, the company cannot pass on to the shareholder the benefit of the tax it has paid, because a distribution from a share capital account (whether or not tainted) is unfrankable (see paragraphs 202‑45(e) and 975‑300(3)(ba) of this Act).