(1) The second situation is one in which:
(a) the * corporate tax entity makes a * franked distribution, or a * distribution franked with an exempting credit, to a * member of the entity in respect of a * membership interest in the entity; and
(b) at the time the distribution was made, the member was under an obligation to pay the distribution to another person under a securities lending arrangement; and
(c) the obligation was incurred in the member's capacity as the borrower under the securities lending arrangement; and
(d) the * distribution closing time occurred during the borrowing period.
(2) The * distribution is taken to have been made to the other person as a * member of the entity (and not to the member).
Note: As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208.
(3) The distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216-5.