Document ID: chunk:federal_register_of_legislation:C2010C00648:clause:10_7:p2
Version: federal_register_of_legislation:C2010C00648
Segment Type: clause
Provision Reference: sch 10 cl 7 (pt 2/6)
Character Range: 182133–184708

in addition to any other amount included in that assessable income in relation to the distribution under any other provision of this Act.

Note: The amount will affect the income tax liability of a partner in the partnership, or a beneficiary or the trustee of the trust: see Divisions 5 and 6 of Part III of the Income Tax Assessment Act 1936.

Allocation of the additional amount of assessable income

 (3) Despite any provisions in Divisions 5 and 6 of Part III of the Income Tax Assessment Act 1936, 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 that trustee of the trust; and
 (d) the entity has an amount of assessable income for that year that is attributable to all or a part of the distribution;
then, the entity's assessable income for that year also includes so much of the franking credit amount as is equal to its *share of the *franking credit on the distribution.

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 is entitled to a share of that net income and has a 100% share of the distribution under section 207‑55). P therefore has an amount of assessable income that is equal to its share of the distribution. Under this subsection, P's assessable income 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 share of the net income therefore does not include any of the franking credit.

207‑45  Tax offset—distribution flows indirectly to an entity

  An entity to whom a *franked distribution *flows indirectly in an income year is entitled to a *tax