Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:13_15:p1
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 13 cl 15 (pt 1/11)
Character Range: 109020–112014

15  After Division 207
Insert:

Division 208—Exempting entities and former exempting entities

Table of Subdivisions
 Guide to Division 208
208‑A What are exempting entities and former exempting entities?
208‑B Franking with an exempting credit
208‑C Amount of the exempting credit on a distribution
208‑D Distribution statements
208‑E Distributions to be franked with exempting credits to the same extent
208‑F Exempting accounts and franking accounts of exempting entities and former exempting entities
208‑G Tax effects of distributions by exempting entities
208‑H Tax effect of a distribution franked with an exempting credit

Guide to Division 208

Table of sections
208‑5 What is an exempting entity?
208‑10 Former exempting entities
208‑15 Distributions by exempting entities and former exempting entities

208‑5  What is an exempting entity?
 (1) An exempting entity is a corporate tax entity that is effectively owned by entities that, either because they are not Australian residents or because they receive distributions as exempt income, would not be able to fully utilise franking credits on distributions by the corporate tax entity.
 (2) In deciding whether a corporate tax entity is effectively owned by such entities, these rules:
 (a) look at the membership interests in the entity that involve the holder of the interest in bearing the risks and accruing the opportunities of ownership of the entity; and
 (b) ask whether at least 95% of those membership interests, and 95% of any interests in those membership interests, are held by Australian residents or entities that receive distributions as exempt income.

208‑10  Former exempting entities
  When an entity ceases to be an exempting entity, it becomes a former exempting entity.

208‑15  Distributions by exempting entities and former exempting entities
  To ensure that franking credits accumulated by an exempting entity are not the target of franking credit trading, these rules:
 (a) limit the circumstances in which a distribution franked with those credits can give rise to benefits under the imputation system; and
 (b) quarantine those credits by moving them into a separate account, called the exempting account, when the entity ceases to be an exempting entity; and
 (c) deny a recipient of a distribution franked with a credit from that account any benefit under the imputation system as a result of that distribution, unless the recipient was a member of the entity immediately before it became a former exempting entity.

Subdivision 208‑A—What are exempting entities and former exempting entities?

Table of sections
208‑20 Exempting entities
208‑25 Effective ownership of entity by prescribed persons
208‑30 Accountable membership interests
208‑35 Accountable partial interests
208‑40 Prescribed persons
208‑45 Persons who are taken to be prescribed persons
208‑50 Former exempting companies

208‑20  Exempting entities
  A *corporate tax entity is an exempting entity at a particular time if, at that