Taxation Laws Amendment Act (No. 4) 1995 (171 of 1995)
SCHEDULE 2 AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936 RELATING TO DIVIDEND IMPUTATION
158. After Division 12 of Part IIIAA
Insert:
"Division 13-Transitional provisions arising from the introduction of class C franking credits and class C franking debits
160ASF. Class C conversion time of a company
(1) The class C conversion time of a company is the earliest of the following times:
(a) the time when the first class C franking credit of the company rises;
(b) the time immediately before the end of the 1995-96 franking year of the company;
(c) the nominated class C conversion time (see subsection (2)).
"(2) A company may, at any time before the earlier of the times mentioned in paragraphs (1)(a) and (b), make an irrevocable written election that that time, or a time that is after that time, is that company's nominated class C conversion time.
Conversion of class A franking account balance to class C franking account balance
"160ASG. Conversion of class A franking surplus
(1) If, at a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) the company has a class A franking surplus; then, immediately after the company's class C conversion time:
(c) a class A franking debit of the company arises equal to that class A franking surplus; and
(d) a class C franking credit of the company also arises that is worked out using the formula:
Amount of class A franking surplus x 39/61 x 64/36
Conversion of class A franking deficit
"(2) If, at a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) the company has a class A franking deficit; then, immediately after the company's class C conversion time:
(c) a class A franking credit of the company arises equal to that class A franking deficit; and
(d) a class C franking debit of the company also arises that is worked out using the formula:
Amount of class A franking deficit x 39/61 x 64/36
Conversion of class B franking account balance to class C franking account balance
"160ASH. Conversion of class B franking surplus
(1) If a company has a class B franking surplus at the class C conversion time then, immediately after that time:
(a) a class B franking debit of the company arises equal to that class B franking surplus; and
(b) a class C franking credit of the company also arises that is worked out using the formula:
Amount of class B franking surplus x 33/67 x 64/36
Conversion of class B franking deficit
"(2) If a company has a class B franking deficit at the class C conversion time then, immediately after that time:
(a) a class B franking credit of the company arises equal to that class B franking deficit; and
(b) a class C franking debit of the company also arises that is worked out using the formula:
Amount of class B franking deficit x 33/67 x 64/36
Changes to franking account balances after a company's class C conversion time
"160ASI. Class A franking credit arising after class C conversion time
(1) If, at a particular time after a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) a class A franking credit of the company arises under this Part (apart from under this section, subsection 160ASG(2), subsection 160ASJ(2) or subsection 160ASK(1)); then, at that time:
(c) a class A franking debit arises equal to the amount of the class A franking credit; and
(d) a class C franking credit also arises equal to the amount worked out using the formula:
Amount of class A franking credit x 39/61 x 64/36
Class A franking debit arising after class C conversion time
"(2) If, at a particular time after a company's class C conversion time:
(a) the company is not a life assurance company; and
(b) a class A franking debit of the company arises under this Part (apart from under this section, subsection 160AQB(1), subsection 160ASG(1), subsection 160ASJ(1) or subsection 160ASK(1)); then, at that time:
(c) a class A franking credit arises equal to the amount of the class A franking debit; and
(d) a class C franking debit also arises equal to the amount worked out using the formula:
Amount of class A franking debit x 39/61 x 64/36
Class B franking credit arising after class C conversion time
"(3) If, at a particular time after a company's class C conversion time, a class B franking credit of a company arises under this Part (apart from under this section, subsection 160ASH(2) or subsection 160ASK(2)):
(a) a class B franking debit arises at that time equal to the amount of the class B franking credit; and
(b) a class C franking credit also arises at that time equal to the amount worked out using the formula:
Amount of class B franking credit x 33/67 x 64/36
Class B franking debit arising after class C conversion time under
provisions other than subsection 160AQB(2)
"(4) If, at a particular time after a company's class C conversion time, a class B franking debit of a company arises under this Part (apart from under this section, subsection 160AQB(2), subsection 160ASH(1) or subsection 160ASK(2)):
(a) a class B franking credit arises at that time equal to the amount of the class B franking debit; and
(b) a class C franking debit also arises at that time equal to the amount worked out using the formula:
Amount of class B franking debiit x 33/67 x 64/36
Note: Subsection (5) deals with class B debits arising from the payment of class B franked dividends.
Class B franking debit arising under subsection 160AQB(2) after class C conversion time
"(5) If, at a particular time after the company's class C conversion time, a class B franking debit of a company arises under subsection 160AQB(2) (and subsection 160ASK(2) does not apply), a class B franking credit and a class C franking debit of the company each equal to the amount of the class B franking debit arise at that time. Provisions relating to companies that cease to be life assurance companies
"160ASJ. Conversion of class A franking surplus
(1) If:
(a) a company is a life assurance company at the company's class C conversion time; and
(b) at a particular time (the transition time) after the company's class C conversion time, the company ceases to be a life assurance company (other than by ceasing to be a company); and
(c) at the transition time the company has a class A franking surplus;
then, immediately after the transition time:
(d) a class A franking debit of the company equal to that class A franking surplus arises; and
(e) a class C franking credit of the company also arises that is worked out using the formula:
Amount of class A franking surplus x 39/61 x 64/36
Conversion of class A franking deficit
"(2) If:
(a) a company is a life assurance company at the company's class C conversion time; and
(b) at a particular time (the transition time) after the company's class C conversion time, the company ceases to be a life assurance company (other than by ceasing to be a company); and
(c) at the transition time the company has a class A franking deficit;
then, immediately after the transition time:
(d) a class A franking credit of the company arises equal to that class A franking deficit; and
(e) a class C franking debit of the company also arises that is worked out using the formula:
Amount of class A franking deficit x 39/61 x 64/36
Provisions relating to companies with class A or class B required franking amounts
"160ASK. Class A required franking amounts
(1) If:
(a) a company, other than a life assurance company, pays a dividend at a particular time after the class C conversion time of the company; and
(b) the beginning of the reckoning day for the dividend is before the class C conversion time for the company; and
(c) a class A franking debit arises from the payment of the dividend;
then, at that time:
(d) a class A franking credit arises equal to the amount of the class A franking debit; and
(e) a class C franking debit also arises that is worked out using the formula:
Amount of class A franking debit x 39/61 x 64/36
Class B required franking amounts
"(2) If:
(a) a company pays a dividend at a particular time after the class C conversion time of the company; and
(b) the beginning of the reckoning day for the dividend is before the class C conversion time for the company; and
(c) a class B franking debit arises from the payment of the dividend;
then, at that time:
(d) a class B franking credit arises equal to the amount of the class B franking debit; and
(e) a class C franking debit also arises that is worked out using the formula:
Amount of class B franking debit x 33/67 x 64/36
Required franking amounts in certain cases covered by subsection 160AQE(2)
"160ASL. When section applies
(1) This section applies in relation to a dividend paid by a company to a shareholder if:
(a) the beginning of the reckoning day for the dividend is after the company's class C conversion time; and
(b) the dividend is the current dividend under subsection 160AQE(2); and
(c) the beginning of the reckoning day for the earlier dividend mentioned in that subsection is before the company's class C conversion time.
Effect on required franking amount-companies other than life assurance companies
"(2) If the company is not a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of RFS in subsection 160AQE(2):
(a) the amount that will be the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
Amount (if any) that will be the class A
franked amount of the earlier dividend x 39/61 x 64/36
+ Amount (if any) that will be the
class B franked amount of the
earlier dividend
x 33/67 x 64/36
(b) the required franking amount in relation to the earlier dividend is taken to be the amount worked out using the formula: Class A required franking amount
(if any) of the earlier dividend x 39/61 x 64/36
+ Class B required franking amount
(if any) of the earlier dividend
x 33/67 x 64/36
Effect on required franking amount-life assurance companies
"(3) If the company is a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of RFS in subsection 160AQE(2):
(a) the amount that will be the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
Amount (if any) that will be the class A
franked amount of the earlier dividend
+ Amount (if any) that will
be the class B franked
amount of the earlier
dividend x 33/67 x 64/36
(b) the required franking amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
Class A required franking
amount (if any) of the
earlier dividend + Class B required franking
amount (if any) of the
earlier dividend
x 33/67 x 64/36
Required franking amounts in certain cases covered by subsection 160AQE(3)
"160ASM. When section applies
(1) This section applies in relation to a dividend paid by a company to a shareholder if:
(a) the beginning of the reckoning day for the dividend is after the company's class C conversion time; and
(b) the dividend is the current dividend under subsection 160AQE(3); and
(c) the beginning of the earlier reckoning day mentioned in that subsection is before the company's class C conversion time.
Effect on required franking amount-companies other than life assurance companies
"(2) If the company is not a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of EFA in subsection 160AQE(3), the amount that is the franked amount in relation to the earlier franked dividend is taken to be the amount worked out using the formula:
Amount (if any) that is
the class A franked amount
of the earlier franked x 39/61 x 64/36
dividend + Amount (if any) that
is the class B franked amount
of the earlier franked
dividend
x 33/67 x 64/36
Effect on required franking amount-life assurance companies
"(3) If the company is a life assurance company at the beginning of the reckoning day for the current dividend then, for the purposes of the definition of EFA in subsection 160AQE(3), the amount that is the franked amount in relation to the earlier dividend is taken to be the amount worked out using the formula:
Amount (if any) that is the
class A franked amount of the
earlier franked dividend + Amount (if any) that
is the class B franked
amount of the earlier
franked dividend
x 33/67 x 64/36
"160ASN. Variation of certain declarations under section 160AQF
(1) A declaration that is made before a company's class C conversion time in relation to a dividend, or dividends, paid by the company where the beginning of the reckoning day for at least one of the dividends is after that time may, despite subsection 160AQF(2), be varied, before the reckoning day, to take account of the introduction of class C franking credits and debits.
"(2) If:
(a) a company pays more than one dividend under a resolution; and
(b) the beginning of the reckoning day for at least one of the dividends is before the class C conversion time for the company; and
(c) the beginning of the reckoning day for at least one of the dividends is after the class C conversion time for the company; and
(d) the franked amount of each of the dividends covered by paragraph (b) is substantially similar (taking into account the different classes of franking credits) to the franked amount of each of the dividends covered by paragraph (c);
the company is taken, for the purposes of subparagraphs 160AQF(1)(c)(ii), (1AA)(c)(ii) and (1AAA)(c)(ii) to have specified the same percentage for each of the dividends to which the resolution relates.".