Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-C - Consequence of transfer: tainting of share capital account  

SECTION 197-65   Choosing to untaint - further franking debits may arise  

When this section applies

197-65(1)    
This section applies if:

(a) a company chooses to untaint its *share capital account; and

(b) the applicable franking percentage (within the meaning of subsection (3)) is higher than the percentage that was the *benchmark franking percentage in relation to the *franking period in which the transfer of an amount (the transferred amount ) that is, or is part of, the *tainting amount occurred.

Note:

If paragraph (b) is satisfied in relation to 2 or more amounts, this section is to be applied separately in relation to each of those amounts (so a separate franking debit will arise in relation to each of those amounts).

Franking debit arises in relation to making the choice

197-65(2)    
A *franking debit arises in the company ' s *franking account in relation to the transferred amount. The debit arises immediately before the end of the *franking period in which the choice to untaint is made.

197-65(3)    

The amount of the *franking debit is the amount by which the amount calculated in accordance with the following formula exceeds the amount of the franking debit that arose under section 197-45 in relation to the transferred amount:

	Transferred amount	×	Applicable franking percentage
			Applicable gross-up rate

where:

applicable franking percentage
means:

(a) if, before the debit arises, the *benchmark franking percentage for the *franking period in which the choice to untaint is made has already been set by section 203-30 - that percentage; or

(b) otherwise - 100%.

applicable gross-up rate
means the company ' s *corporate tax gross-up rate for the income year in which the franking debit arises.