Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 207.110

Effect of non-assessable income on gross up and tax offset

             (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.

Exempt institutions



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