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