Document ID: chunk:federal_register_of_legislation:C2025C00029:section:11:p56
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 11 (pt 56/64)
Character Range: 3442050–3444824

of sections

Operative provisions
204‑25 Substituting tax‑exempt bonus shares for franked distributions

Operative provisions

204‑25  Substituting tax‑exempt bonus shares for franked distributions

Franking debit arises if tax‑exempt bonus shares are issued in substitution for a franked distribution
 (1) This section gives rise to a *franking debit in an entity's *franking account if:
 (a) the exercise of a choice or selection by a *member of the entity; or
 (b) the member's failure to exercise a choice or selection;
has the effect of determining (to any extent) that the entity issues one or more *tax‑exempt bonus shares, to that member or another member of the entity, in substitution (in whole or in part) for one or more *franked distributions by the entity to that member or another member.

Amount of the debit
 (2) The debit is equal to the one that would arise in the entity's *franking account if the entity made a *distribution, equal to the *franked distributions referred to in subsection (1), franked at the entity's *benchmark franking percentage for the *franking period in which the shares are issued.

When does the debit arise
 (3) The debit arises on the day when the shares are issued.

Meaning of tax‑exempt bonus share
 (4) For a company whose *shares have no par value, tax‑exempt bonus share means a share issued by the company in the circumstances mentioned in subsection 6BA(6) of the Income Tax Assessment Act 1936.
 (5) For any other company, tax‑exempt bonus share means a *share issued by the company to a *shareholder in the company where:
 (a) the amount or value of the share is debited against an amount standing to the credit of a share premium account of the company; and
 (b) no part of the paid‑up value of the share is a dividend; and
 (c) the share is issued:
 (i) as a bonus share; or
 (ii) in the circumstances mentioned in subsection 6BA(1) of the Income Tax Assessment Act 1936, as in force immediately before 1 July 1998.

Where a company has no benchmark franking percentage for the franking period
 (6) If a company has no *benchmark franking percentage for the *franking period in which the *tax‑exempt bonus share is issued, this section applies as if the entity had a benchmark franking percentage of 100% for that period.

Subdivision 204‑D—Streaming distributions

Guide to Subdivision 204‑D

204‑26  What this Subdivision is about
      This Subdivision prevents the streaming of imputation benefits to one member of a corporate tax entity in preference to another by either imposing a franking debit or denying an imputation benefit where there is streaming.

Table of sections

Operative provisions
204‑30 Streaming distributions
204‑35 When does a franking debit arise if the Commissioner makes a determination