Commonwealth Consolidated Acts

NEW BUSINESS TAX SYSTEM (CONSOLIDATION AND OTHER MEASURES) ACT 2003 - SCHEDULE 30

Income Tax Assessment Act 1997

1   After Division   215

Insert:

Division   216 -- Cum dividend sales and securities lending arrangements

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

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

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

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

    There are 2 situations in which a * franked distribution, or a distribution * franked with an exempting credit, that is made to a * member of a * corporate tax entity is taken to have been made to another entity.

216 - 5   First situation (cum dividend sales)

  (1)   The first situation is one in which:

  (a)   the * corporate tax entity makes a * franked distribution, or a * distribution franked with an exempting credit, to a * member of the entity in respect of a * membership interest in the entity; and

  (b)   at the * distribution closing time, the member is under an obligation to transfer the membership interest to another person under a contract for the sale of the membership interest; and

  (c)   the contract:

  (i)   requires that the distribution be paid on to the other person; and

  (ii)   is entered into in the ordinary course of trading on an * approved stock exchange in Australia or elsewhere.

  (2)   The * distribution is taken to have been made to the other person as a * member of the entity (and not to the member).

Note:   As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division   207 or 208.

  (3)   The * distribution referred to in paragraph   ( 1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section   216 - 10.

216 - 10   Second situation (securities lending arrangements)

  (1)   The second situation is one in which:

  (a)   the * corporate tax entity makes a * franked distribution, or a * distribution franked with an exempting credit, to a * member of the entity in respect of a * membership interest in the entity; and

  (b)   at the time the distribution was made, the member was under an obligation to pay the distribution to another person under a * securities lending arrangement; and

  (c)   the obligation was incurred in the member's capacity as the borrower under the securities lending arrangement; and

  (d)   the * distribution closing time occurred during the borrowing period.

  (2)   The * distribution is taken to have been made to the other person as a * member of the entity (and not to the member).

Note:   As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division   207 or 208.

  (3)   The distribution referred to in paragraph   ( 1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section   216 - 5.

216 - 15   Distribution closing time

    If * distributions by a * corporate tax entity are made to those * members who were members as at a particular time at or before the distribution is made, that time is the distribution closing time in relation to those distributions.

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

Table of sections

216 - 20   Cum dividend sale--statement by securities dealer

216 - 25   Cum dividend sale--statement by party

216 - 30   Securities lending arrangements--statement by borrower

216 - 20   Cum dividend sale--statement by securities dealer

    If:

  (a)   section   216 - 5 applies in relation to a * franked distribution or a * distribution franked with an exempting credit (cum dividend sales); and

  (b)   a * securities dealer has acted for a particular party to the contract concerned;

the securities dealer must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

216 - 25   Cum dividend sale--statement by party

    If:

  (a)   section   216 - 5 applies in relation to a * franked distribution or a * distribution franked with an exempting credit (cum dividend sales); and

  (b)   a particular party to the contract concerned has not had a * securities dealer acting for him or her;

that party must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

216 - 30   Securities lending arrangements--statement by borrower

    If section   216 - 10 ( * securities lending arrangements) applies in relation to a * franked distribution, or a * distribution franked with an exempting credit, the borrower must, as soon as practicable after the making of the distribution, give to the lender a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

2   Application

The amendments made by this Schedule apply to distributions made after 30   June 2002.

Notes to the New Business Tax System (Consolidation and Other Measures) Act 2003

Note 1

The New Business Tax System (Consolidation and Other Measures) Act 2003 as shown in this compilation comprises Act No.   16 , 200 3 amended as indicated in the Tables below.

For all relevant information pertaining to application, saving or transitional provisions see Table A.

Table of Acts

(a)   Subsection 2(1) (item   19) of the Tax Laws Amendment (2004 Measures No.   7) Act 2005 provides as follows:

  (1)   Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Table of Amendments

Table A

Application, saving or transitional provisions

Tax Laws Amendment (2010 Measures No.   1) Act 2010 (No.   56 , 2010)

Schedule   5

139   Application provision

(1)   The amendments made by this Part apply in relation to a consolidated group or MEC group only if the head company of the group makes a choice in accordance with subitems   ( 2) and (3).

(2)   The choice must be made:

  (a)   on or before 30   June 2011; or

  (b)   within a further time allowed by the Commissioner.

(3)   The choice must be made in writing.

140   Transitional provision--revocation of choice for transitional entities

(1)   This item applies in relation to a consolidated group or MEC group if:

  (a)   the head company of the group makes a choice in accordance with subitems   ( 2) and (3) of the previous item; and

  (b)   the group came into existence:

  (i)   on or after 1   July 2003; and

  (ii)   on a day other than the first day of the first income year of the head company starting after 1   July 2003.

(2)   In determining whether a choice under subsection 701 - 5(1) of the Income Tax (Transitional Provisions) Act 1997 in relation to the group can be revoked, treat the reference in paragraph 701 - 5(4)(a) of that Act to 31   December 2005 as instead being a reference to the day that is 6 months after the commencement of this item.

[[1]]   Item 3 is taken never to have had effect.