Document ID: chunk:federal_register_of_legislation:C2016C00523:clause:2_18:p1
Version: federal_register_of_legislation:C2016C00523
Segment Type: clause
Provision Reference: sch 2 cl 18 (pt 1/2)
Character Range: 41468–44065

18  Subsection 207‑35(3)
Repeal the subsection, substitute:
 (3) Subsection (4) applies if:
 (a) a *franked distribution is made, or *flows indirectly, to a partnership or the trustee of a trust in an income year; and
 (b) the assessable income of the partnership or trust for that year includes an amount (the franking credit amount) that is all or a part of the additional amount of assessable income included under subsection (1) in relation to the distribution; and
 (c) the distribution flows indirectly to an entity that is a partner in the partnership, or a beneficiary or the trustee of the trust; and
 (d) disregarding Division 6E of Part III of the Income Tax Assessment Act 1936, the entity has an amount of assessable income for that year that is attributable to all or a part of the distribution.
 (4) Despite any provisions in Divisions 5 and 6 of Part III of the Income Tax Assessment Act 1936, the entity's assessable income for that year also includes:
 (a) in the case of an entity that is a partner in a partnership—so much of the franking credit amount as is equal to the entity's *share of the *franking credit on the distribution; and
 (b) in the case of an entity that is a beneficiary of a trust:
 (i) so much of the franking credit amount as is equal to the entity's share of the franking credit on the distribution; and
 (ii) the amount mentioned in section 207‑37.
Example: A franked distribution of $70 is made to the trustee of a trust in an income year. The trust also has $100 of assessable income from other sources. Under subsection (1), the trust's assessable income includes an additional amount of $30 (which is the franking credit on the distribution). The trust has a net income of $200 for that income year.
 There are 2 beneficiaries of the trust, P and Q, who are presently entitled to the trust's income. Under the trust deed, P is entitled to all of the franked distribution and Q is entitled to all other income.
 The distribution flows indirectly to P (as P has a share of the trust's net income that is covered by paragraph 97(1)(a) and has a share of the distribution under section 207‑55 equal to 100% of the distribution).
 Under this subsection, P's assessable income includes $70 (the amount mentioned in section 207‑37 (attributable franked distribution)) and also includes the full amount of the franking credit (as P's share of the franking credit on the distribution is $30 under section 207‑57). Q's assessable income does not include any of the amount of the franked distribution or the franking credit.
 (5) Subsection (6) applies if:
 (a)