Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 215.10

Certain non-share dividends by ADIs unfrankable

             (1)  A * non-share dividend paid by an ADI (an authorised deposit-taking institution) for the purposes of the Banking Act 1959 is unfrankable if:

                     (a)  the ADI is an Australian resident; and

                     (b)  the non-share dividend is paid in respect of a * non-share equity interest that:

                              (i)  by itself; or

                             (ii)  in combination with one or more * schemes that are * related schemes to the scheme under which the interest arises;

                            forms part of the ADI's Tier 1 capital either on a solo or consolidated basis (within the meaning of the * prudential standards); and

                     (c)  the non-share equity interest is issued at or through a * permanent establishment of the ADI in a * listed country; and

                     (d)  the funds from the issue of the non-share equity interest are raised and applied solely for one or more purposes permitted under subsection (2) in relation to the non-share equity interest.

             (2)  The permitted purposes in relation to the * non-share equity interest (the relevant interest ) are the following:

                     (a)  the purpose of the business of the ADI carried on at or through the permanent establishment other than the transfer of funds directly or indirectly to:

                              (i)  the Australian head office of the permanent establishment; or

                             (ii)  any * connected entity of the ADI that is an Australian resident; or

                            (iii)  a permanent establishment of the ADI, or of a connected entity of the ADI, located in Australia;

                     (b)  the purpose of redeeming:

                              (i)  a * debt interest; or

                             (ii)  a non-share equity interest;

                            that is issued, before the relevant interest is issued, at or through the permanent establishment and is held by a connected entity of the ADI that is an Australian resident;

                     (c)  the purpose of returning funds to:

                              (i)  the Australian head office of the permanent establishment; or

                             (ii)  a permanent establishment of the ADI or of a connected entity of the ADI, located in Australia;

                            if the funds are contributed, before the relevant interest is issued, for use in the business of the ADI carried on at or through the permanent establishment.



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