Document ID: chunk:federal_register_of_legislation:C2010C00604:clause:27_3:p1
Version: federal_register_of_legislation:C2010C00604
Segment Type: clause
Provision Reference: sch 27 cl 3 (pt 1/6)
Character Range: 355546–358414

3  After Division 208
Insert:

Division 210—Venture capital franking

Table of Subdivisions

 Guide to Division 210
210‑A Franking a distribution with a venture capital credit
210‑B Participating PDFs
210‑C Distributions that are frankable with a venture capital credit
210‑D Amount of the venture capital credit on a distribution
210‑E Distribution statements
210‑F Rules affecting the allocation of venture capital credits
210‑G Venture capital sub‑account
210‑H Effect of receiving a distribution franked with a venture capital credit

Guide to Division 210

Table of sections

210‑1 Purpose of venture capital franking
210‑5 How is this achieved?
210‑10 What is a venture capital credit?
210‑15 What does the PDF have to do to distribute the credits?
210‑20 Limits on venture capital franking

210‑1  Purpose of venture capital franking

  The purpose of these rules is to encourage venture capital investment by superannuation funds and other entities that deal with superannuation.

210‑5  How is this achieved?

  This is done by giving tax benefits to those entities when they invest in PDFs, which are the vehicles for venture capital investment. If the PDF makes a distribution franked with a venture capital credit, the relevant venture capital investor receives a certain part of a distribution from the PDF as exempt income and, in addition, is entitled to a tax offset equal to the venture capital credit.

210‑10  What is a venture capital credit?

 (1) There is a venture capital franking sub‑account in the franking account of each PDF.

 (2) Venture capital credits arise in the sub‑account if the PDF pays income tax that is reasonably attributable to capital gains from venture capital investments.

210‑15  What does the PDF have to do to distribute the credits?

  Only a participating PDF can distribute venture capital credits. A PDF elects to participate by keeping a record of its venture capital sub‑account.

210‑20  Limits on venture capital franking

 (1) The venture capital credit on a distribution cannot exceed the franking credit on the distribution. It is, in this sense, a species of franking credit.

 (2) A PDF can only distribute venture capital credits if it does it so that all members of the PDF receive venture capital credits in proportion to their holdings.

 (3) If a PDF has a venture capital surplus when it makes a distribution, it must frank the distribution with venture capital credits.

 (4) There are measures to ensure that a PDF does not maintain a venture capital deficit over a prolonged period.

Subdivision 210‑A—Franking a distribution with a venture capital credit

Guide to Subdivision 210‑A

210‑25  What this Subdivision is about

      A PDF can only frank a distribution with a venture capital credit if certain conditions are met. These conditions are set out in this Subdivision.

Table