Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 709 - Other rules applying when entities become subsidiary members etc.  

Subdivision 709-A - Franking accounts  

Treatment of franking accounts at joining time

SECTION 709-60   Nil balance franking account for joining entity  

709-60(1)    
This section operates if an entity (the joining entity ) becomes a ^* subsidiary member of a ^* consolidated group at a time (the joining time ).

709-60(2)    
If the joining entity's ^* franking account is in surplus just before the joining time:

(a) a debit equal to the ^* franking surplus arises at the joining time in the joining entity's franking account; and

(b) a credit equal to the franking surplus arises at the joining time in the franking account of the ^* head company of the group.

709-60(3)    
If the joining entity's ^* franking account is in deficit just before the joining time:

(a) a credit equal to the ^* franking deficit arises at the joining time in the joining entity's franking account; and

(b) the joining entity is liable to pay ^* franking deficit tax as if the joining entity's income year had ended just before the joining time; and

(c) despite item 5 of the table in section 205-15 , a credit does not arise under that item in the joining entity's franking account because of that liability.