(1) This section applies to an entity to whom a * franked distribution is made, or * flows indirectly, in any of the following circumstances:
(a) the entity is an * exempt institution that is eligible for a refund and the distribution does not flow indirectly to the entity as a partner in a partnership under subsection 207-50(2);
(b) the distribution is, or the entity's * share of the distribution would have been, this kind of income in its hands:
(i) * exempt income under section 295-385 (about income from assets set aside to meet current pension liabilities), section 295-390 (about income from other assets used to meet current pension liabilities) or section 295-400 (about income of a PST attributable to current pension liabilities); or
(ii) * non-assessable non-exempt income under paragraph 320-37(1)(a) (segregated exempt assets of a life insurance company) or paragraph 320-37(1)(d) (certain amounts received by a friendly society) of this Act.
(2) The following have effect in relation to the entity:
(a) section 207-90 or 207- 95 (as appropriate) does not apply to the entity;
(b) if the entity would, apart from section 207-90 or 207- 95, be entitled to a * tax offset under section 207-20 or 207- 45 in relation to the distribution--the entity is entitled to that tax offset;
(c) if the entity would not be entitled to such a tax offset, the entity is entitled to a tax offset under this section that is equal to:
(i) if the distribution is made to the entity--the * franking credit on the distribution; or
(ii) if the distribution * flows indirectly to the entity--the entity's * share of the franking credit on the distribution;
(d) if the distribution flows indirectly through the entity to another entity--subsection 207- 35(3) and section 207- 45 do not apply to that other entity.
Note: Paragraph (2)(c) only applies to an exempt institution that is eligible for a refund and that is not entitled to a tax offset under section 207-20 or 207- 45. An entity covered by paragraph (1)(b) will, in all cases, be entitled to a tax offset under section 207-20 or 207- 45.