A company may elect to have an amount of a distribution made to
another group member taken into account in computing its shadow ACT
where it has franked investment income which would have reduced the
amount treated as paid had shadow ACT been due in respect of group
distributions. An election will not affect the amount of shadow ACT
treated as paid by the company making the distribution. Its effect
and the intention is that the distribution, to the extent that
there is otherwise unused franked investment income to cover, will
constitute franked investment income of the recipient company and
be taken into account in computing its shadow ACT. The amount to
which the election can apply is limited in order to forestall
surplus shadow ACT being positioned in a company that is to be sold
or artificially degrouped.
The election must be made within two years after the end of
the accounting period and is irrevocable.
