(b) the company makes an attribution account payment consisting of a frankable distribution that has been franked in accordance with section 202‑5 of the Income Tax Assessment Act 1997, or that has been franked with an exempting credit in accordance with section 208‑60 of that Act; and
(c) immediately before the attribution account payment is made, there is an attribution surplus for the company in relation to the taxpayer that is attributable to the attribution credit;
then, for the purposes of applying section 23AI and Divisions 4 and 5 of this Part in relation to the taxpayer, the attribution account payment is taken to be reduced to the extent that it is franked.
366 Direct attribution account interest in a company
(1) An entity holds a direct attribution account interest in a company at a particular time equal to the percentage that the entity holds, or is entitled to acquire, at that time of:
(a) the total paid‑up share capital of the company; or
(b) the total rights of shareholders to vote, or participate in any decision‑making, concerning any of the following:
(i) the making of distributions of capital or profits of the company to its shareholders;
(ii) the constituent document of the company;
(iii) any variation of the share capital of the company; or
(c) the total rights to distributions of capital or profits of the company to its shareholders on winding‑up; or
(d) the total rights to distributions of capital or profits of the company to its shareholders, otherwise than on winding‑up;
or, if different percentages are applicable under the preceding paragraphs, the greater or greatest of those percentages.
(2) If the percentage of total rights to vote or participate in decision‑making differs as between differing types of decision‑making, the highest of those percentages applies for the purposes of paragraph (1)(b).
(3) For the purposes of the application of subsection (1) to a company, the percentage that an entity holds, or is entitled to acquire, at a particular time (in this subsection called the test time) in a statutory accounting period of the company, of the total rights to distributions of capital or profits of the company to its shareholders on winding‑up is to be worked out by:
(a) ascertaining whichever of the following is applicable:
(i) the capital of the company as at the end of the statutory accounting period;
(ii) the profits of the company for the statutory accounting period; and
(b) assuming that the rights to such distributions that the entity holds, or is entitled to acquire, at the test time were the same at all other times during the statutory accounting period; and
(c) ascertaining the percentage concerned:
(i) at the end of the statutory accounting period instead of at the test time; and
(ii) on that assumption.
(4) For the purposes of the application of subsection (1) to a company, the percentage that an entity holds, or is entitled to acquire, at a particular time (in this subsection called the test time) in a statutory accounting period of the company, of the total rights to distributions of capital or profits of the company to its shareholders, otherwise than on winding‑up, is to be worked out by:
(a) ascertaining whichever of the following is applicable:
(i) the capital of the company as at the end of the statutory accounting period;
(ii) the profits of the company for the statutory accounting period; and
(b) assuming that the rights to such distributions that the entity holds, or is entitled to acquire, at the test time were the same at all other times during the statutory accounting period; and
(c) ascertaining the percentage concerned:
(i) at the end of the statutory accounting period instead of at the test time; and
(ii) on that assumption.
(5) Eligible finance shares, widely distributed finance shares and transitional finance shares in a company are to be ignored for the purposes of the application of subsection (1) to the company.
367 Direct attribution account interest in a partnership
(1) An entity that is a partner in a partnership holds a direct attribution account interest in the partnership at a particular time equal to the percentage that the partner holds, or is entitled to acquire, of:
(a) the total interests in the profits of the partnership; or
(b) the total interests in the property of the partnership;
or, if those percentages differ, the greater of those percentages.
(2) For the purposes of the application of subsection (1) to a partnership:
(a) the percentage that the partner holds, or is entitled to acquire, of the total interests in the profits of the partnership; or
(b) the percentage that the partner holds, or is entitled to acquire, of the total interests in the property of the partnership;
at a particular time (in this subsection called the test time) in an accounting period of the partnership is to be worked out by:
(c) ascertaining whichever of the following is applicable:
(i) the profits of the partnership for the accounting period;
(ii) the property of the partnership as at the end of the accounting period; and
(d) assuming that the percentage that the partner holds, or that the partner is entitled to acquire, at the test time was the same at all other times during the accounting period; and
(e) ascertaining the percentage concerned:
(i) at the end of the accounting period instead of at the test time; and
(ii) on that assumption.
368 Direct attribution account interest in a trust
(1) A beneficiary in a trust holds a direct attribution account interest in the trust at a particular time equal to:
(a) the percentage of the income of the trust represented by the share of the income to which the beneficiary is entitled, or that the beneficiary is entitled to acquire; or
(b) the percentage of the corpus of the trust represented by the share of the corpus to which the beneficiary is entitled, or that the beneficiary is entitled to acquire;
or, if those percentages differ, the greater of those percentages.
(2) For the purposes of the application of subsection (1) to a trust:
(a) the percentage of the income of the trust represented by the share of the income to which the beneficiary is entitled, or that the beneficiary is entitled to acquire; or
(b) the percentage of the corpus of the trust represented by the share of the corpus to which the beneficiary is entitled, or that the beneficiary is entitled to acquire;
at a particular time (in this subsection called the test time) in an accounting period of the trust, is to be worked out by:
(c) ascertaining whichever of the following is applicable:
(i) the income of the trust for the accounting period;
(ii) the corpus of the trust as at the end of the accounting period; and
(d) assuming that the share to which the entity is entitled, or that the entity is entitled to acquire, at the test time was the same at all other times during the accounting period; and
(e) ascertaining the percentage concerned:
(i) at the end of the accounting period instead of at the test time; and
(ii) on that assumption.
(3) Each entity that is an eligible transferor in relation to a trust at a particular time holds a direct attribution account interest in the trust at that time equal to:
(a) if paragraph (b) does not apply—100%; or
(b) if, because there are 2 or more eligible transferors in relation to the trust, the Commissioner reduces an attribution percentage under subsection 362(3) or (4) or subsection 362(5) applies—such lower percentage as the Commissioner considers reasonable in the circumstances.
(4) An entity that holds a direct attribution account interest in a trust at a particular time because of subsection (3) is not taken to hold any direct attribution account interest in the trust at that particular time because of subsection (1).
369 Indirect attribution account interest in an entity
(1) The indirect attribution account interest that an entity (in this section called the bottom entity) holds in another entity (in this section called the top entity) is calculated in accordance with this section.
(2) An interposed entity is not to be taken into account in calculating the indirect attribution account interest unless the entity is an attribution account entity.
(3) If there is only one entity interposed between the bottom entity and the top entity, the indirect attribution account interest is calculated by multiplying the direct attribution account interest that the bottom entity holds in the interposed entity by the direct attribution account interest that the interposed entity holds in the top entity.
(4) If there are 2 entities interposed between the bottom entity and the top entity, the indirect attribution account interest is calculated:
(a) by multiplying the direct attribution account interest that the bottom entity holds in the first interposed entity by the direct attribution account interest that the first interposed entity holds in the second interposed entity; and
(b) by multiplying the result of the calculation in paragraph (a) by the direct attribution account interest that the second interposed entity holds in the top entity.
(5) If there are 3 or more entities interposed between the bottom entity and the top entity, the indirect attribution account interest is calculated:
(a) by multiplying the direct attribution account interest that the bottom entity holds in the first interposed entity by the direct attribution account interest that the first interposed entity holds in the second interposed entity; and
(b) by multiplying the result of the multiplication referred to in paragraph (a) by the direct attribution account interest that the second interposed entity holds in the third interposed entity;
and so on, ending with a multiplication by the direct attribution account interest that the last interposed entity holds in the top entity.
(6) For the purposes of this section, an entity (in this subsection called the second entity) is interposed between 2 other entities (in this subsection called the first entity and the third entity respectively) if, and only if:
(a) the first entity has a direct attribution account interest in the second entity; and
(b) the second entity has a direct attribution account interest in the third entity.
370 Attribution surplus
An attribution surplus for an attribution account entity in relation to a taxpayer exists at a particular time if the entity’s total attribution credits arising before that time in relation to the taxpayer exceed its total attribution debits arising before that time in relation to the taxpayer.
371 Attribution credit
(1) An attribution credit arises for an attribution account entity (in this section called the eligible entity) in relation to a taxpayer if:
(a) an amount is included in the taxpayer’s assessable income under section 456 in respect of the attributable income of the eligible entity for a statutory accounting period; or
(b) an amount is included in the taxpayer’s assessable income under section 457 as a result of a change of residence by the eligible entity; or
(d) an attribution account payment that requires an attribution debit for another entity in relation to the taxpayer is made to the eligible entity.
(2) Subject to subsection (4), the amount of the attribution credit is equal to the amount included in assessable income or to the amount of the attribution debit, as the case may be.
(4) Where:
(a) the attribution credit arises under paragraph (1)(d) in relation to an attribution account payment consisting of a non‑portfolio dividend paid to the eligible entity, where the eligible entity is a company; and
(b) the eligible entity is or will be liable to pay an amount of foreign tax on the attribution account payment or on amounts that include the attribution account payment;
then the amount of the attribution credit is reduced by the amount calculated using the formula:
Start formula Attribution account percentage times Foreign tax end formula
where:
Attribution account percentage means the taxpayer’s attribution account percentage for the attribution account entity.
Foreign tax means the amount of foreign tax, to the extent that it is attributable to the attribution account payment.
(5) The attribution credit arises:
(a) in a paragraph (1)(a) case where subsection 319(6) does not apply to the statutory accounting period referred to in that paragraph—at the end of the statutory accounting period; or
(aaa) in a paragraph (1)(a) case where subsection 319(6) applies to the statutory accounting period referred to in that paragraph—at the beginning of the statutory accounting period; or
(b) in a paragraph (1)(b) case—subject to subsection (8), at the time of the change of residence referred to in that paragraph; or
(d) in a paragraph (1)(d) case—when the attribution account payment referred to in that paragraph is made.
(6) Where, apart from this subsection, an attribution credit would arise in relation to an attribution account entity for an Australian partnership or an Australian trust in respect of an amount included in the assessable income of the partnership or trust of a year of income under section 456 or 457, then, subject to subsection (7):
(a) the attribution credit does not arise for the partnership or trust; and
(b) an attribution credit arises in relation to the attribution account entity for:
(i) any taxpayer for whom, as a result of the amount being so included, a tax detriment would arise in circumstances referred to in paragraphs 460(2)(a) and (b) or paragraphs 460(3)(a) and (b); and
(ii) any taxpayer where, as a result of the amount being so included, a tax detriment would arise for the trustee of a trust in which the taxpayer is a beneficiary, in respect of an amount assessable to the trustee under section 98 in respect of the taxpayer’s share of the net income of the trust, in circumstances referred to in paragraph 460(4)(a); and
(iii) any taxpayer in the capacity of trustee of a trust, where, as a result of the amount being so included, a tax detriment would arise for the taxpayer in respect of an amount assessable to the taxpayer under section 99 or 99A, in circumstances referred to in paragraph 460(4)(a); and
(c) the amount of the attribution credit referred to in paragraph (b) equals the amount of the tax detriment, as reduced by any application of section 460; and
(d) the attribution credit referred to in paragraph (b) arises at the time when the attribution credit referred to in paragraph (a) would, but for this subsection, have arisen.
(7) Subsection (6) does not apply to an Australian trust that is, in relation to the year of income referred to in that subsection:
(b) a public trading trust within the meaning of Division 6C of that Part; or
(c) a complying superannuation fund, a non‑complying superannuation fund, a complying approved deposit fund, a non‑complying approved deposit fund or a pooled superannuation trust.
(8) If:
(a) a company ceases to be resident in an unlisted country and becomes a resident of a listed country; and
(b) an amount (in this subsection called the section 457 amount) is included in a taxpayer’s assessable income under section 457 as a result of the change of residence; and
(c) a particular part (in this subsection called the eligible part) of the section 457 amount is attributable to a hypothetical disposal of a particular asset of the company at the residence change time; and
(d) it might reasonably be expected that, if and when the company actually disposes of the asset, so much of the gain derived by the company on the actual disposal of the asset that accrued before the residence change time will be subject to tax in the listed country;
the taxpayer may elect to defer the timing of so much of the paragraph (1)(b) attribution credit as is attributable to the eligible part from the time of the change of residence referred to in that paragraph until immediately before the payment by the company of a dividend out of the gain derived by the company on the actual disposal of the asset.
(9) An election for the purposes of subsection (8):
(b) is irrevocable; and
(c) has no effect unless it is made:
(i) within 6 months after the end of the later of the following years of income:
(A) the year of income in which the residence change time took place;
(B) the year of income in which this subsection commenced; or
(ii) within such further period as the Commissioner allows.
372 Attribution debit
(1) An attribution debit arises for an attribution account entity (in this section called the eligible entity) in relation to a taxpayer if:
(a) the eligible entity makes an attribution account payment to the taxpayer or to another attribution account entity; and
(b) immediately before the eligible entity makes the attribution account payment, there is an attribution surplus for the eligible entity in relation to the taxpayer.
(2) Subject to subsection (4), the amount of the debit is the lesser of:
(a) the attribution surplus; and
(b) whichever of the following is applicable:
(i) if the attribution account payment is made to the taxpayer—the attribution account payment;
(ii) in any other case—the taxpayer’s attribution account percentage (for the attribution account entity to which the payment is made) of the attribution account payment.
(4) Where:
(a) the attribution account payment is made to an attribution account entity that is a trust; and
(b) the attribution surplus, for the eligible entity, is in relation to the taxpayer in the capacity of trustee of the trust (because it is a surplus that resulted from an attribution credit or credits that arose under subparagraph 371(6)(b)(iii));
then the amount of the attribution debit is the lesser of: