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INCOME TAX ASSESSMENT ACT 1997 - SECT 220.400

Gross - up and tax offset for distribution from NZ franking company reduced by supplementary dividend

  (1)   This section has effect if:

  (a)   an * NZ franking company:

  (i)   makes a * franked distribution to an entity (the recipient ) in an income year; and

  (ii)   pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) to the recipient in connection with the franked distribution; and

  (b)   an amount is included in the recipient's assessable income for the income year under section   207 - 20, and the recipient is entitled to a * tax offset for the income year under that section or section   207 - 110; and

  (c)   the recipient is entitled to a tax offset under Division   770 because of the inclusion of the * distribution in the recipient's assessable income for the income year.

Reduced gross - up

  (2)   The amount included in the recipient's assessable income under section   207 - 20 is reduced by the amount of the supplementary dividend (but not below zero).

Reduced tax offset

  (3)   The amount of the * tax offset under section   207 - 20 is reduced by the amount of the supplementary dividend (but not below zero).

What happens if certain provisions apply

  (4)   Subsections   (2) and (3) do not apply to the recipient in relation to the * franked distribution if one or more of the following provisions also apply to the recipient in relation to the distribution:

  (a)   subsection   207 - 90(1);

  (b)   subsection   207 - 90(2);

  (c)   subsection   207 - 145(1);

  (d)   subsection   207 - 145(2).

  (5)   If subsection   207 - 90(2) or 207 - 145(2) would also apply to the recipient in relation to the * franked distribution, apply that subsection on the basis that:

  (a)   the amount of the * franking credit on the distribution;

had been reduced by:

  (b)   so much of the supplementary dividend as does not exceed that amount of the franking credit.

Relationship with sections   207 - 20, 207 - 90 and 207 - 145

  (6)   Sections   207 - 20, 207 - 90 and 207 - 145 have effect subject to this section.


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