Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_9:p3
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 9 (pt 3/9)
Character Range: 70956–73730

requirements for the general rule
207‑D Adjustments where the ultimate recipient of a distribution is not a resident
207‑E No gross‑up or tax offset where distribution is not taxed in any case
207‑F No gross‑up or tax offset where the imputation system has been manipulated

Guide to Division 207

Table of sections

207‑5 Overview

207‑5  Overview

 (1) If a corporate tax entity makes a franked distribution to one of its members, then, as a general rule:
 (a) an amount equal to the franking credit on the distribution is included in the member's assessable income; and
 (b) the member is entitled to a tax offset equal to the same amount.

 (2) In some cases a residency requirement must be satisfied for the general rule to apply.

 (3) If the distribution is made to certain partnerships or trusts, it will be treated as flowing indirectly to the 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. However, it is only the ultimate recipients of the distribution, who are themselves liable for tax on the amount that flows indirectly to them, that are entitled to the tax offset.

 (4) Adjustments are made to the assessable income of the ultimate recipient of the distribution where that entity is not an Australian resident.

 (5) There are exceptions to both the general rule mentioned in subsection (1), and the special rules mentioned in subsection (3). Basically, these exceptions are created:
 (a) where the relevant entity would not have paid tax on the distribution in any case; and
 (b) where there is a manipulation of the imputation system in a manner that is not permitted under income tax law.

Subdivision 207‑A—Effect of receiving a franked distribution generally

Guide to Subdivision 207‑A

207‑10  What this Subdivision is about

      As a general rule, if a member of an entity receives a franked distribution:
         • an amount equal to the franking credit on the distribution is included in the member's assessable income; and
         • the member is entitled to a tax offset equal to the franking credit on the distribution.

Table of sections

Operative provisions

207‑15 Applying the general rule
207‑20 General rule—gross‑up and tax offset

[This is the end of the Guide.]

Operative provisions

207‑15  Applying the general rule

 (1) This Subdivision sets out, as a general rule, the tax effect of receiving a *franked distribution.

 (2) Where a distribution *flows indirectly to an entity, 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