An entity is taken to have received an income tax refund for an income year immediately before the end of the income year or immediately before it ceased to be a franking entity if:
- the refund is paid within three months after the end of the income year or within three months after it ceased to be a franking entity (and it is attributable to a period in the year during which the entity was a franking entity), and
- the franking account would have been in deficit, or in deficit to a greater extent, at the end of that income year or immediately before it ceased to be a franking entity, had the refund been received during the income year or before the entity ceased to be a franking entity.
This rule ensures that an entity does not avoid franking deficit tax by deferring the time at which a franking debit occurs in its franking account.
Some late balancing corporate tax entities may elect to have their franking deficit tax liability determined on 30 June. If a late balancing corporate tax entity makes this election it will be taken to have received an income tax refund immediately before 30 June or immediately before it ceased to be a franking entity if:
- the refund is received either within three months after 30 June, or within three months immediately after it ceased to be a franking entity
- the refund is attributable to the 12 month period ending on 30 June, or is attributable to a period within that 12 months during which the entity was a franking entity, and
- the franking account would have been in deficit, or in deficit to a greater extent, at the end of 30 June or immediately before it ceased to be a franking entity, had the refund been received immediately before 30 June, or immediately before it ceased to be a franking entity.
If you receive a refund of the kind explained above and you are already obliged to lodge (and have not yet lodged) a franking account tax return then you can account for the refund and your other liabilities or obligations in a single return. If you do not account for the refund in that single return, then you need to account for it in a 'further return'. If you do account for the refund in a further return:
- print Y in the box at Section A, Is this a subsequent franking account tax return for the income year?, and
- show the amount of the franking deficit tax attributable to the refund of income tax in Section B, label F-FDT attributable to refund. Do not complete label F unless this franking account tax return is a further return.