Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_9:p4
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 9 (pt 4/9)
Character Range: 73491–76293

this Subdivision does not apply either to the entity to which it flows indirectly or to the entity to whom it is made. Subdivision 207‑B applies in those cases.

Note: Subdivision 207‑B deals with distributions to an entity through certain interposed partnerships or trusts. A franked distribution will not flow indirectly through some partnerships or trusts, for example, an eligible entity within the meaning of Part IX of the Income Tax Assessment Act 1936, or an exempt institution that is eligible for a refund.

 (3) This Subdivision applies subject to:
 (a) Subdivision 207‑C; and
 (b) Subdivision 207‑E; and
 (c) Subdivision 207‑F.

Note 1: Subdivision 207‑C sets out the residency requirements which must be satisfied by an individual or a corporate tax entity that receives a franked distribution.

Note 2: Subdivision 207‑E sets out cases in which the general rule will not apply because the distribution is exempt income and so would not be taxed in any case. It also replaces the general rule for exempt institutions that are eligible for a refund and, in some cases, for eligible entities within the meaning of Part IX of the Income Tax Assessment Act 1936 and for life insurance companies.

Note 3: Subdivision 207‑F sets out cases in which the general rule will not apply because the imputation system has been manipulated in a way that is not permitted under income tax law, for example by streaming distributions or dividend stripping.

207‑20  General rule—gross‑up and tax offset

 (1) If an entity makes a *franked distribution to another entity, the assessable income of the receiving entity, for the income year in which the distribution is made, includes the amount of the *franking credit on the distribution. This is in addition to any other amount included in the receiving entity's assessable income in relation to the distribution under any other provision of this Act.

 (2) The receiving entity is entitled to a *tax offset for the income year in which the distribution is made. The tax offset is equal to the *franking credit on the distribution.

Subdivision 207‑B—Effect of receiving a franked distribution through certain partnerships and trusts

Guide to Subdivision 207‑B

207‑25  What this Subdivision is about

      A franked distribution to certain partnerships and trusts is treated as flowing indirectly to members of the partnership or trust.
      Each member's share of the franking credit on the distribution is included in that member's assessable income.
      Each member is then given a tax offset equal to that share of the franking credit, provided the member is not itself a partnership or trust through which the distribution flows indirectly.
      Where the trustee, rather than a member, is the taxpayer on a share of the distribution, it is