Document ID: chunk:federal_register_of_legislation:C2004A00898:clause:1_160apaaab:p1
Version: federal_register_of_legislation:C2004A00898
Segment Type: clause
Provision Reference: sch 1 cl 160APAAAB (pt 1/3)
Character Range: 108498–111375

160APAAAB  Non‑share dividends not frankable unless profits available

 (1) This section applies if:
 (a) a company pays a non‑share dividend; and
 (b) immediately before the payment, the available frankable profits of the company were less than the amount of the non‑share dividend.

 (2) If the available frankable profits of the company at the relevant time is nil or negative, the non‑share dividend:
 (a) is not frankable; and
 (b) is not a dividend to which paragraph 160AQF(1)(c), (1AA)(c) or (1AAA)(c) or 160AQFA(1)(c) or (2)(c) or section 160AQG applies.

Example: A company has no profits except profits from the revaluation of an asset. It pays a non‑share dividend to a non‑share equity holder. The non‑share dividend is not a frankable dividend because the company's available frankable profits at the time of payment is nil.

 Note that dividends from asset revaluation reserves are not frankable because of paragraph (g) of the definition of frankable dividend in section 160APA.

 (3) In any other case, the non‑share dividend (the original dividend) is taken, for the purposes of the relevant provisions, to consist of 2 separate non‑share dividends:
 (a) a non‑share dividend that is a frankable non‑share dividend; and
 (b) a non‑share dividend that:
 (i) is not a frankable non‑share dividend; and
 (ii) is not a dividend to which paragraph 160AQF(1)(c), (1AA)(c) or (1AAA)(c) or 160AQFA(1)(c) or (2)(c) or section 160AQG applies.
The relevant provisions are sections 45Z to 46M, this Part and any other provision of this Act whose operation depends on this Part.

 (4) The amount of the non‑share dividend referred to in paragraph (3)(a) is equal to the available frankable profits.

 (5) The amount of the non‑share dividend referred to in paragraph (3)(b) is the difference between the original dividend and the frankable dividend referred to in paragraph (3)(a).

 (6) A company that pays a non‑share dividend may anticipate available frankable profits if:
 (a) the company:
 (i) has announced the payment of; or
 (ii) is committed or has resolved (formally or informally) to pay;
  share dividends (the committed share dividends) after payment of the non‑share dividend; and
 (b) but for this subsection, subsection (2) or (3) would apply to the non‑share dividend mentioned in paragraph (a); and
 (c) the company's available frankable profits would be greater than nil at the relevant time if the committed share dividends were ignored; and
 (d) it is reasonable to expect that available profits will arise after payment of the non‑share dividend and before payment of the committed share dividends.
The available frankable profits immediately before the company pays the non‑share dividend are then the amount estimated by the company having regard to the expected profits referred to in paragraph (c).

 (7) The amount estimated under subsection (6)