Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p14
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 14/19)
Character Range: 3786603–3789407

effect if:
 (a) an *NZ franking company:
 (i) makes a *franked distribution to an entity (the recipient) in an income year; and
 (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) to the recipient in connection with the franked distribution; and
 (b) an amount is included in the recipient's assessable income for the income year under section 207‑20, and the recipient is entitled to a *tax offset for the income year under that section or section 207‑110; and
 (c) the recipient is entitled to a tax offset under Division 770 because of the inclusion of the *distribution in the recipient's assessable income for the income year.

Reduced gross‑up
 (2) The amount included in the recipient's assessable income under section 207‑20 is reduced by the amount of the supplementary dividend (but not below zero).

Reduced tax offset
 (3) The amount of the *tax offset under section 207‑20 is reduced by the amount of the supplementary dividend (but not below zero).

What happens if certain provisions apply
 (4) Subsections (2) and (3) do not apply to the recipient in relation to the *franked distribution if one or more of the following provisions also apply to the recipient in relation to the distribution:
 (a) subsection 207‑90(1);
 (b) subsection 207‑90(2);
 (c) subsection 207‑145(1);
 (d) subsection 207‑145(2).
 (5) If subsection 207‑90(2) or 207‑145(2) would also apply to the recipient in relation to the *franked distribution, apply that subsection on the basis that:
 (a) the amount of the *franking credit on the distribution;
had been reduced by:
 (b) so much of the supplementary dividend as does not exceed that amount of the franking credit.

Relationship with sections 207‑20, 207‑90 and 207‑145
 (6) Sections 207‑20, 207‑90 and 207‑145 have effect subject to this section.

220‑405  Franked distribution and supplementary dividend flowing indirectly
 (1) This section has effect if:
 (a) an *NZ franking company:
 (i) makes a *franked distribution; and
 (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) in connection with the franked distribution; and
 (b) the franked distribution and the supplementary dividend *flow indirectly to an entity (the recipient) in an income year because the recipient is a partner in a partnership or a beneficiary or trustee of a trust; and
 (c) the recipient is entitled under section 207‑45 to a *tax offset in connection with the *distribution; and
 (d) the recipient is entitled to a tax offset under Division 770 for the income year because of the distribution.

Recipient that is a partner or beneficiary
 (2) If the *franked distribution *flows indirectly to the recipient under subsection 207‑50(2) or (3), then:
 (a) the recipient can