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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM    View history reference

Division 204 - Anti-streaming rules    View history reference

Subdivision 204-D - Streaming distributions    View history reference

Operative provisions

SECTION 204-30  Streaming distributions  

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Commissioner's power to make a determination when distributions or distributions and other benefits are streamed

204-30(1)  

This section empowers the Commissioner to make determinations if an entity streams one or more *distributions (or one or more distributions and the giving of other benefits), whether in a single *franking period or in a number of franking periods, in such a way that:


(a) an *imputation benefit is, or apart from this section would be, received by a *member of the entity as a result of the distribution or distributions; and


(b) the member would *derive a *greater benefit from franking credits than another member of the entity; and
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(c) the other member of the entity will receive lesser imputation benefits, or will not receive any imputation benefits, whether or not the other member receives other benefits.

The member that derives the greater benefit from franking credits is the favoured member. The member that receives the lesser imputation benefits is the disadvantaged member.

Examples of other benefits

204-30(2)  

These are examples of the giving of other benefits:


(a) issuing bonus *shares;


(b) returning *paid-up share capital;
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(c) *forgiving a debt;
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(d) the entity or another entity making a payment of any kind, or giving any property, to a *member or to another person on a member's behalf.

Nature of the determination that the Commissioner may make

204-30(3)  

The Commissioner may make one or more of these determinations:


(a) that a specified *franking debit arises in the *franking account of the entity, for a specified *distribution or other benefit to a disadvantaged member;


(b) that a specified *exempting debit arises in the *exempting account of the entity, for a specified *distribution or other benefit to a disadvantaged member;
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(c) that no *imputation benefit is to arise in respect of a distribution that is made to a favoured member and specified in the determination.
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A determination must be in writing.

204-30(4)  

The Commissioner may:


(a) specify the *franking debit under paragraph (3)(a) by specifying the *franking percentage to be used in working out the amount of the debit; and


(b) specify the *exempting debit under paragraph (3)(b) by specifying the *exempting percentage to be used in working out the amount of the debit.

204-30(5)  

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The Commissioner may specify the *distribution under paragraph (3)(a), (b) or (c) by specifying:


(a) the date on which the distribution was made, or the period during which the distribution was made; and


(b) the member, or class of members, to whom the distribution was made.

What is an imputation benefit?

204-30(6)  

A *member of an entity receives an imputation benefit as a result of a distribution if:


(a) the member is entitled to a *tax offset under Division 207 as a result of the distribution; or


(b) an amount would be included in the member's assessable income as a result of the distribution because of the operation of section 207-35; or
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(c) a *franking credit would arise in the *franking account of the member as a result of the distribution; or


(d) an *exempting credit would arise in the *exempting account of the member as a result of the distribution; or
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(e) the member would not be liable to pay *withholding tax on the distribution, because of the operation of paragraph 128B(3)(ga) of the Income Tax Assessment Act 1936; or
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(f) the member is entitled to a *tax offset under section 210-170 as a result of the distribution.
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When does a favoured member derive greater benefit from franking credits?

204-30(7)  

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The following subsection lists some of the cases in which a *member of an entity *derives a greater benefit from franking credits than another member of the entity. It is not an exhaustive list.

204-30(8)  

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A *member of an entity *derives a greater benefit from franking credits than another member of the entity if any of the following circumstances exist in relation to the other member in the income year in which the distribution giving rise to the benefit is made, and not in relation to the first member:


(a) the other member is a foreign resident;
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(b) the other member would not be entitled to any *tax offset under Division 207 because of the distribution;


(c) the amount of income tax that, apart from this Division, would be payable by the other member because of the distribution is less than the tax offset to which the other member would be entitled;


(d) the other member is a *corporate tax entity at the time the distribution is made, but no *franking credit arises for the entity as a result of the distribution;


(e) the other member is a *corporate tax entity at the time the distribution is made, but cannot use *franking credits received on the distribution to *frank distributions to its own members because:


(i) it is not a *franking entity; or

(ii) it is unable to make *frankable distributions;


(f) the other member is an *exempting entity.
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204-30(9)  

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A *member of an entity *derives a greater benefit from franking credits than another member of the entity if any of the following circumstances exist in relation to the first member in the income year in which the *distribution giving rise to the benefit is made, and not in relation to the other member:


(a) a *franking credit arises for the first member under item 5, 6 or 7 of the table in section 208-130 (distributions by *exempting entities to exempting entities);


(b) a franking credit or *exempting credit arises for the first member because the distribution is *franked with an exempting credit;


(c) the first member is entitled to a *tax offset because:


(i) the distribution is a *franked distribution made by an exempting entity; or

(ii) the distribution is *franked with an exempting credit.

204-30(10)  

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A *member of an entity *derives a greater benefit from franking credits than another member if the first member is entitled to a *tax offset under section 210-170 as a result of the *distribution, and the other member is not.


 



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