Document ID: chunk:federal_register_of_legislation:C2010C00617:clause:5_1:p1
Version: federal_register_of_legislation:C2010C00617
Segment Type: clause
Provision Reference: sch 5 cl 1 (pt 1/2)
Character Range: 57947–60601

1  Subsections 124ZM(1), (2) and (3)
Repeal the subsections, substitute:

 (1) If a company pays a dividend to a shareholder at a time when the company is a PDF, so much (if any) of the dividend as has not been franked in accordance with section 160AQF is exempt from income tax.

 (1A) The rest of this section applies to so much of the dividend as has been franked.

Usual case

 (1B) Subsections (2) to (8) (inclusive) apply if the assessable income of a year of income of a taxpayer who or that is:
 (a) a company or a natural person (other than a company or natural person in the capacity of a trustee); or
 (b) a corporate unit trust in relation to that year of income; or
 (c) a public trading trust in relation to that year of income; or
 (d) an eligible entity within the meaning of Part IX in relation to that year of income;
would (apart from subsection (2)) include:
 (e) the franked amount of the dividend; or
 (f) a trust amount or partnership amount in relation to the dividend in relation to which there would be a flow‑on franking amount.
This subsection does not apply to cases dealt with in subsections (1C) and (1D).

Taxpayers who qualify for venture capital franking rebate

 (1C) If a taxpayer (other than a life assurance company) is entitled to a venture capital franking rebate in relation to the dividend under section 160ASEP, then:
 (a) so much of the franked amount of the dividend as is venture capital franked is exempt income of the taxpayer; and
 (b) the remaining franked amount is, subject to subsection (3), exempt income of the taxpayer.

 (1D) If a life assurance company is entitled to a venture capital franking rebate in relation to the dividend under section 160ASEP, then:
 (a) the amount worked out using the following formula is exempt income of the life assurance company:
  where:
  CS/RA income is the amount of the life assurance company's assessable income for the year of income in which the dividend is received that is allocated to the CS/RA class of business under subsection 116CE(4).
  total income is the life assurance company's assessable income for the year of income in which the dividend is paid.
  venture capital franked amount has the meaning given by subsection (9); and
 (b) the remaining franked amount is, subject to subsection (3), exempt income of the life assurance company.

 (2) Subject to subsection (3), the following is exempt income of the taxpayer:
 (a) if paragraph (1B)(e) applies—the franked amount;
 (b) if paragraph (1B)(f) applies—so much of the trust amount or partnership amount as would constitute the flow‑on franking amount.

 (3) Paragraphs (1C)(b) and (1D)(b)