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INCOME TAX ASSESSMENT ACT 1997 - SECT 204.40

Amount of the franking debit

             (1)  The amount of the * franking debit arising because of a determination by the Commissioner under paragraph 204-30(3)(a) must not exceed:

                     (a)  if the specified * distribution has been * franked--the difference between the amount of the * franking credit on the distribution and an amount worked out by multiplying the amount of the distribution by the highest * franking percentage at which a distribution to a favoured member is franked; or

                     (b)  if the specified distribution, although * frankable, has not been franked--an amount worked out by multiplying the amount of the distribution by the highest franking percentage at which a distribution to a favoured member is franked; or

                     (c)  if the specified distribution is * unfrankable--an amount worked out by multiplying the amount of the distribution by the highest franking percentage at which a distribution to a favoured member is franked; or

                     (d)  if the specified benefit is the issue of bonus shares from a share premium account--an amount worked out by multiplying the amount debited to the share premium account in respect of the bonus shares by the highest franking percentage at which a distribution to a favoured member is franked; or

                     (e)  if some other benefit is specified--an amount worked out by multiplying the value of the benefit by the highest franking percentage at which a distribution to a favoured member is franked.

             (2)  In specifying the * franking debit, the Commissioner must have regard to:

                     (a)  any * franking debit already arising in the * franking account of the entity under paragraph 203-50(1)(b) because the entity franked the specified * distribution in breach of the * benchmark rule; and

                     (b)  any franking debit already arising in the franking account of the entity, because of the specified distribution or benefit, under section 204-15 (about linked distributions) or section 204- 25 (about substituting * tax-exempt bonus shares for * franked distributions).



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