Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 215.25

  (1)   A * corporate tax entity that pays a * non - share dividend may anticipate * available frankable profits if:

  (a)   the entity:

  (i)   has announced the payment of; or

  (ii)   is committed or has resolved (formally or informally) to pay;

    * distributions other than non - share dividends (the committed distributions ) after payment of the non - share dividend; and

  (b)   but for this subsection, section   215 - 15 would apply to the non - share dividend; and

  (c)   the entity's available frankable profits would be greater than nil at the relevant time if the committed distributions were ignored; and

  (d)   it is reasonable to expect that available profits will arise after payment of the non - share dividend and before payment of the committed distributions; and

  (e)   it is reasonable to expect that, having regard to the available profits mentioned in paragraph   (d), the amount of the entity's * adjusted available frankable profits immediately after each of the committed distributions is paid will be greater than nil.

The available frankable profits immediately before the entity pays the non - share dividend is then the smallest of the amounts of the adjusted available frankable profits mentioned in paragraph   (e).

  (2)   The entity's adjusted available frankable profits immediately after a committed distribution is paid is the amount that would be its * available frankable profits at that time if all committed distributions to be paid after that time, and the * non - share dividend, were ignored.

  (3)   A * franking debit arises for the entity if:

  (a)   the entity anticipates * available frankable profits under subsection   (1); and

  (b)   the available frankable profits of the entity are less than nil:

  (i)   immediately after the last of the committed distributions is made; or

  (ii)   immediately before the end of the income year following the income year in which the * non - share dividend is paid;

whichever is earlier.

  (4)   The * franking debit is equal to the lesser of:

  (a)   the amount by which the * available frankable profits is below nil; and

  (b)   the amount of the franked part of the * non - share dividend (worked out using subsection   215 - 20(2)) or, if more than one non - share dividend is made at the relevant time, the sum of the amounts of the franked parts of those non - share dividends.

  (5)   In working out the entity's * available frankable profits for the purposes of subsection   (3) or (4), disregard:

  (a)   any * distributions that:

  (i)   the entity announces, or becomes committed to or resolves (formally or informally) to pay after the payment of the * non - share dividend; and

  (ii)   have not been paid; and

  (b)   any estimate made by the entity under subsection   (1) after the non - share dividend is paid.

Table of Subdivisions

216 - A   Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else

216 - B   Statements to be made where there is a cum dividend sale or securities lending arrangement

Table of sections

216 - 1   When a distribution made to a member of a corporate tax entity is treated as having been made to someone else

216 - 5   First situation (cum dividend sales)

216 - 10   Second situation (securities lending arrangements)

216 - 15   Distribution closing time