Section 208 — Income Tax Assessment Act 1997 (Cth)

(1) An exempting entity is a corporate tax entity that is effectively owned by entities that, either because they are not Australian residents or because they receive distributions as exempt income or non‑assessable non‑exempt income, would not be able to fully utilise franking credits on distributions by the corporate tax entity.

(2) In deciding whether a corporate tax entity is effectively owned by such entities, these rules:

(a) look at the membership interests in the entity that involve the holder of the interest in bearing the risks and accruing the opportunities of ownership of the entity; and

(b) ask whether at least 95% of those membership interests, and 95% of any interests in those membership interests, are held by Australian residents or entities that receive distributions as exempt income or non‑assessable non‑exempt income.

Related sections

• s 204 — ‑1  Objects
• s 205 — ‑1  What this Division is about
• s 207 — ‑5  Overview
• s 210 — ‑1  Purpose of venture capital franking
• s 214 — ‑1  Purpose of the system
• s 215 — ‑1  Application of the imputation system to non‑share equity interests

Research how courts apply s 208

BriefBridge searches Australian caselaw by meaning — every answer cited to the paragraph.