Document ID: chunk:federal_register_of_legislation:C2005A00147:clause:2_1:p6
Version: federal_register_of_legislation:C2005A00147
Segment Type: clause
Provision Reference: sch 2 cl 1 (pt 6/6)
Character Range: 134824–136470

have declared had it declared that same proportion on all those distributions.

Note: Breaching subsection (2) may make the entity subject to a penalty under section 288‑80 in Schedule 1 to the Taxation Administration Act 1953 (about over declaring conduit foreign income).

Example: There are 10,000 membership interests in AusCo Limited, 7,500 held by foreign residents and 2,500 held by Australian residents. It has $1,800 of conduit foreign income.

 AusCo makes an unfranked distribution of 50 cents per membership interest to all of its members. It declares $1,500 of the distribution to be conduit foreign income for its 7,500 foreign membership interests (20 cents per membership interest or 40% of each distribution) and none for its Australian membership interests.

 AusCo is taken to have declared the same proportion (40% of each distribution) of conduit foreign income for its Australian membership interests (which amounts to $500 of conduit foreign income). It is therefore taken to have declared $2,000 of conduit foreign income. This is an over‑declaration of $200 and a penalty under section 288‑80 in Schedule 1 to the Taxation Administration Act 1953 will apply.

 (3) For the purposes of subsection (2), ignore *membership interests and *non‑share equity interests that do not carry a right to receive *distributions (other than distributions on winding up).

 (4) Despite subsection (2), an entity that receives a *frankable distribution that has an *unfranked part is entitled to rely on the *distribution statement made by the entity that made the distribution.

Part 2—Other amendments

Income Tax Assessment Act 1936