Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p17
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 17/34)
Character Range: 3566774–3569510

is to arise in respect of the distribution for the entity;
 (d) the distribution is made as part of a *dividend stripping operation;
 (da) the distribution is one to which section 207‑157 (which is about distribution washing) applies;
 (db) the distribution is one to which section 207‑158 (which is about foreign income tax deductions) applies;
then, for the purposes of this Act:
 (e) the amount of the *franking credit on the distribution is not included in the assessable income of the entity under section 207‑20 or 207‑35; and
 (f) the entity is not entitled to a *tax offset under this Division because of the distribution; and
 (g) if the distribution *flows indirectly through the entity to another entity—subsection 207‑35(3) and section 207‑45 do not apply to that other entity.

Part of share of distribution manipulated
 (2) If:
 (a) a *franked distribution is made to an entity; and
 (b) the Commissioner makes a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise in respect of a specified part of the distribution (the specified part) for the entity;
then, for the purposes of this Act:
 (c) the amount of the distribution is taken to have been reduced by the specified part; and
 (d) the amount of the *franking credit on the distribution is to be worked out as follows:
Example: A franked distribution of $70 is made to the trustee of a trust. Apart from this section, the franking credit on the distribution ($30) would be included in the assessable income of the trust under section 207‑35.
 The Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no imputation benefit (within the meaning of that section) is to arise for the trustee in respect of $49 of the distribution.
 Under this subsection, the amount included in the assessable income of the trust under section 207‑35 because of the distribution is reduced from $30 to $9.
 If there is a beneficiary of the trust that is presently entitled to the trust's income, the amount of the distribution that flows indirectly to the beneficiary is reduced from $70 to $21 under this subsection.

What happens if both subsection 207‑90(2) and subsection (2) of this section would apply
 (3) If, apart from this subsection, both subsection 207‑90(2) and subsection (2) of this section would apply to an entity in relation to a *franked distribution, then:
 (a) apply subsection 207‑90(2) first; and
 (b) apply subsection (2) of this section on the basis that the amount of the *franked distribution had been reduced under subsection 207‑90(2).

207‑150  Distribution that flows indirectly to an entity

Whole