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INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2 - Income  

Subdivision D - Dividends  

SECTION 46  REBATE ON DIVIDENDS  

46(1)  [Definitions]  


In this section:

dividend :


(a) means a dividend paid by a company that is a resident but, except in paragraph (3)(a) or (b), does not include a dividend in relation to which section 46A applies; and


(b) does not include a dividend paid in respect of a non-equity share in the company.

"life assurance company" 

(Repealed by No 89 of 2000)

"non-fund component" 

(Repealed by No 62 of 1997)

PDF dividend means a dividend paid to a shareholder that is a PDF.

private company dividend , in relation to a shareholder that is a private company in relation to the year of income, means a dividend paid to the shareholder by another company, being a company that is a resident and is a private company in relation to the year of income of that other company in which the dividend was paid.

SME income component has the same meaning as in Subdivision B of Division 10E.

"standard component" 

(Repealed by No 89 of 2000)

"the insurance funds" 

(Repealed by No 89 of 2000)

46(1A)  [``taxable income'']  


A reference in this section to the taxable income of a year of income of a shareholder that is a life assurance company is a reference to that part of the life assurance company's taxable income that is attributable to shareholders' funds income of the life assurance company for that year of income.

46(1AAA)  [PDF dividend in respect of unregulated investment]  


This section does not apply to a PDF dividend if the dividend is paid in respect of an unregulated investment (within the meaning of the Pooled Development Funds Act 1992).

46(1AA)  [Private company dividends paid on or after 1/7/86]  


The dividends that:


(a) are paid to a shareholder in the year of income commencing on 1 July 1986 or a subsequent year of income; and


(b) apart from this subsection, would be private company dividends;

shall be taken for the purposes of this section to be private company dividends only to the extent of the amount of phasing-out dividends included in the distributable income of the shareholder of the year of income concerned for the purposes of Division 7.

46(2)  [Rebate entitlement]  


Subject to this section, a shareholder, being a company that is a resident, is entitled to a rebate in its assessment in respect of income of the year of income of the amount obtained by applying the average rate of tax payable by the shareholder:


(a) if the shareholder is a private company in relation to the year of income, to the sum of:


(i) one-half of the part of any private company dividends (other than PDF dividends) that is included in its taxable income; and

(ii) the part of any other dividends (other than PDF dividends) that is included in its taxable income; and


(b) if the shareholder is not a private company in relation to the year of income, to the part of any dividends (other than PDF dividends) that is included in its taxable income.

46(2A)  [PDF dividends paid to resident shareholder]  


Subject to this section, if:


(a) one or more PDF dividends were paid in a year of income to a shareholder; and


(b) the shareholder is a resident;

the shareholder is entitled to a rebate in its assessment in respect of income of the year of income. The amount of the rebate is obtained by applying the rate of tax payable by the shareholder in respect of the SME income component of its taxable income to the part of any PDF dividends that is included in its taxable income.

46(2B)  [Purposes of Pt IIIAA Div 1A]  


A shareholder is not entitled to a rebate under subsection (2) or (2A) in respect of a dividend unless the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA.

46(3)  [Further rebate in case of private companies]  


Subject to the succeeding provisions of this section, the Commissioner may allow a shareholder, being a company that is a private company in relation to the year of income and is a resident, a further rebate in its assessment of the amount obtained by applying the average rate of tax payable by the shareholder to one-half of the part of any private company dividends that is included in its taxable income if the Commissioner is satisfied that:


(a) the shareholder has not paid, and will not pay, a dividend during the period commencing at the beginning of the year of income of the shareholder and ending at the expiration of 10 months after that year of income to another private company;


(b) where the shareholder has paid, or may pay, a dividend during the period:


(i) commencing at the beginning of the year of income of the shareholder; and

(ii) ending at the expiration of 10 months after that year of income,
to a company, being a private company in relation to the year of income of the company in which the dividend was, or may be, paid, the company has not paid, and will not pay, a dividend during the period:

(iii) commencing at the beginning of the year of income of the company in which the dividend has been, or may be, paid by the shareholder; and

(iv) ending at the expiration of 10 months after that year of income,
to another private company; or


(c) having regard to all the circumstances, it would be reasonable to allow the further rebate.

46(4)  [Withdrawal of further rebate]  


Where, after the Commissioner has allowed a shareholder, being a company that is a private company in relation to a year of income and is a resident, a further rebate in its assessment in pursuance of subsection (3), the Commissioner becomes satisfied that, having regard to all the circumstances, the rebate ought not to have been allowed, the shareholder shall be deemed not to have been entitled to the rebate.

46(5)  

(Omitted by No 46 of 1986)

46(6)  [Average rate of tax payable]  


For the purposes of subsection (2) and subsection (3), but subject to subsection (6AA), the average rate of tax payable by a shareholder for a year of tax shall be deemed to be an amount per dollar being the amount ascertained by dividing the amount of income tax that would be assessed in respect of the taxable income derived by the shareholder in the year of income if:


(a) the shareholder was not entitled to any rebate of tax or credit against its liability to tax; and


(b) the shareholder was not liable to pay any tax under Division 7;

by a number equal to the number of whole dollars in that taxable income.

46(6AA)  [Life assurance company]  


For the purposes of subsections (2) and (3), the average rate of tax payable for a year of tax by a shareholder that is a life assurance company is the rate of tax applicable under sections 23A and 23B of the Income Tax Rates Act 1986 for the year of income in respect of the ordinary class of the life assurance company's taxable income.

46(6A)  

(Repealed by No 39 of 1997)

46(7)  [Part of dividend included in taxable income]  


For the purposes of subsections (2) and (3), the part of any dividends that is included in the taxable income of a shareholder of the year of income is:


(a) if the taxable income is equal to or less than the amount of the dividends included in the assessable income of the shareholder of the year of income - the whole of the taxable income; or


(b) in any other case - so much of the taxable income as equals the amount (if any) of the dividends included in the assessable income of the shareholder of the year of income.

46(7AA)  [Part of PDF dividend included in taxable income]  


For the purposes of subsection (2A), the part of any PDF dividends that is included in the taxable income of a shareholder of the year of income is:


(a) if the SME income component of the taxable income is equal to or less than the amount of the PDF dividends included in the shareholder's assessable income of the year of income - the whole of the SME income component of the taxable income; or


(b) in any other case - so much of the SME income component of the taxable income as equals the amount (if any) of the PDF dividends included in the shareholder's assessable income of the year of income.

46(7A)  [Application to 1997/98 income year onwards]  


Subsection (7B) applies if:


(a) a shareholder that is a company elects to value an item of trading stock in a particular way under section 70-45 of the Income Tax Assessment Act 1997; and


(b) that value is greater than it would have been if the shareholder had elected to value the item in a different way; and


(c) the shareholder made the actual election for the purpose, or for purposes including the purpose, of increasing the rebate to which the shareholder would be entitled under subsection (2) or (2A), or the rebate that might be allowed to the shareholder under subsection (3).

46(7B)  [Rebate calculation]  


In calculating the rebate, the following are determined as if the shareholder had instead elected to value the item at the lowest amount at which the shareholder could have elected to value it under section 70-45 of the Income Tax Assessment Act 1997:


(a) the part of any dividends (except PDF dividends) included in the shareholder's taxable income;


(b) the part of any private company dividends included in the shareholder's taxable income;


(c) the part of any PDF dividends included in the shareholder's taxable income.

46(8)  [Shareholder in co-operative company]  


A shareholder in a company that is a co-operative company within the meaning of Division 9 is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by that company.

46(9)  [Shareholder in exempt company]  


A shareholder in a company is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by the company if the income of the company is exempt from tax under:


(a) Division 1AB of this Part; or


(b) item 1.1, 1.2, 1.3 or 1.4 of the table in section 50-5, section 50-15, or 50-25 or item 6.1 or 6.2 of the table in section 50-30 of the Income Tax Assessment Act 1997.

46(10)  [Life assurance company not entitled to rebate]  


If:


(a) a dividend is paid by the company to a shareholder that is a life assurance company; and


(b) the assets of the life assurance company from which the dividend was derived were included in the insurance funds of the life assurance company at any time during the period that:


(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and

(ii) ends at the time when the dividend was paid;

the life assurance company is not entitled to a rebate under this section in its assessment in respect of the dividend unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.

46(11)  

(Omitted by No 120 of 1995)

46(12)  [Shareholder in capacity of trustee]  


A shareholder in a capacity of trustee is not, and is taken never to have been, entitled to a rebate under this section.

46(13)  [Corporate unit trust; public trading trust]  


Subsection (12) does not apply to the trustee of:


(a) a corporate unit trust within the meaning of Division 6B; or


(b) a public trading trust within the meaning of Division 6C.


 



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