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New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 28 Machinery provisions for simplified imputation system

Income Tax (Transitional Provisions) Act 1997

13 After Division 210

Insert:

Division 214 - Administering the imputation system

214-1 Application

This Division applies to a corporate tax entity if a liability to pay franking deficit tax arises for the entity under section 205-25 of this Act because of events that occur within a period of 12 months ending on 30 June in any year (the balancing period ).

214-5 Entity must give a franking return

(1) The entity must give the Commissioner a franking return for the balancing period setting out the following information before the end of the month immediately following the end of the period:

(a) if the entity is a franking entity at the end of the balancing period - its franking account balance at the end of the period; and

(b) if the entity ceases to be a franking entity during the balancing period - its franking account balance immediately before it ceased to be a franking entity; and

(c) the amount (if any) of franking deficit tax that the entity is liable to pay under section 205-25 of this Act because of events that have occurred, or are taken to have occurred, during the balancing period.

(2) The return must be in writing in the approved form.

214-10 Notice to a specific corporate tax entity

(1) The Commissioner may give the entity a written notice requiring the entity to give the Commissioner a franking return for the balancing period.

(2) The entity must comply with the requirement within the time specified in the notice, or within any further time allowed by the Commissioner.

(3) The entity must comply with the requirement regardless of whether the entity has given, or has been required to give, the Commissioner a return under section 214-5.

214-15 Effect of a refund on franking returns

If no franking return is outstanding

(1) If:

(a) the entity receives a refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3) of this Act; and

(c) when the refund is received, the entity does not have a franking return that is outstanding for the balancing period in which the liability arose;

the entity must give the Commissioner a franking return for the period within 14 days after the refund is received.

Refund received within 14 days before an outstanding franking return is due

(2) If:

(a) the entity receives a refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3) of this Act; and

(c) when the refund is received, the entity does not have a franking return that is outstanding for the balancing period in which the liability arose; and

(d) the entity receives the refund within the period of 14 days ending on the day by which the outstanding return must be given to the Commissioner;

the entity may, instead of accounting for the liability, or increased liability, in the outstanding return, account for it in a further return given to the Commissioner within 14 days after the refund is received.

Meaning of outstanding

(3) A franking return for a balancing period is outstanding at a particular time if each of the following is true at that time:

(a) the entity has been required to give a franking return for the period;

(b) the time within which the franking return must be given has not yet passed;

214-20 Franking returns for the income year

(1) A franking return for a balancing period is in addition to any franking return that the entity is required to give to the Commissioner under Subdivision 214-A of the Income Tax Assessment Act 1997 for the income year in which the balancing period ends.

(2) However, if an entity is required to give a franking return for a balancing period, it is not required to include in its franking return for the income year in which that period ends anything that should have been included in the franking return for the balancing period.

214-25 Commissioner may make a franking assessment

(1) The Commissioner may make an assessment of:

(a) if the entity is a franking entity at the end of the balancing period - its franking account balance at the end of the period; and

(b) if the entity ceases to be a franking entity during the balancing period - its franking account balance immediately before it ceased to be a franking entity; and

This is a franking assessment for the entity for the balancing period.

(2) The Commissioner must give the entity notice of the assessment as soon as practicable after making the assessment.

(3) The notice may be included in a notice of any other assessment under this Act.

214-30 Commissioner taken to have made a franking assessment on first return

(1) If:

(a) the entity gives the Commissioner a franking return under section 214-5 or 214-10 of this Act on a particular day (the return day ); and

(b) the return is the first franking return given to the Commissioner by the entity for the balancing period; and

the Commissioner is taken to have made a franking assessment for the entity for the period on the return day, and to have assessed:

(d) the entity's franking account balance at a particular time as that stated in the return as the balance at that time; and

(e) the amount (if any) of franking deficit tax payable by the entity because of events that have occurred, or are taken to have occurred, during the period as those stated in the return.

(2) The return is taken to be notice of the assessment signed by the Commissioner and given to the entity on the return day.

214-35 Amendments within 3 years of the original assessment

(1) The Commissioner may amend a franking assessment for the entity for the balancing period at any time during the period of 3 years after the original assessment day for the entity for the period.

(2) The original assessment day for the entity for the balancing period is the day on which the first franking assessment for the entity for the period is made.

214-40 Amended assessments are treated as franking assessments

Once an amended franking assessment for the entity for the balancing period is made, it is taken to be a franking assessment for the entity for the period.

214-45 Further return as a result of a refund affecting a franking deficit tax liability

(1) If:

(a) a franking assessment for the entity for the balancing period has been made; and

(b) on a particular day (the further return day ) the entity gives the Commissioner a further return for the balancing period under subsection 214-15(1) of this Act (because the entity has received a refund of income tax that affects its liability to pay franking deficit tax);

the Commissioner is taken to have amended the entity's franking assessment on the further return day, and to have assessed:

(c) the entity's franking account balance at a particular time as that stated in the further return as the balance at that time; and

(d) the amount of franking deficit tax payable by the entity because of events that have occurred, or are taken to have occurred, during the period as those stated in the further return.

(2) The further return is taken to be notice of the amended assessment signed by the Commissioner and given to the entity on the further return day.

214-50 Later amendments - on request

The Commissioner may amend a franking assessment for the entity for the balancing period after the end of a period of 3 years after the original franking assessment day if, within that 3 year period:

(a) the entity applies for the amendment; and

(b) the entity gives the Commissioner all the information necessary for making the amendment.

214-55 Later amendments - failure to make proper disclosure

If:

(a) the entity does not make a full and true disclosure to the Commissioner of the information necessary for a franking assessment for the entity for the balancing period; and

(b) in making the assessment, the Commissioner makes an under-assessment; and

the Commissioner may amend the assessment at any time during the period of 6 years after the original franking assessment day.

214-60 Later amendments - fraud or evasion

If:

(a) the entity does not make a full and true disclosure to the Commissioner of the information necessary for a franking assessment for the entity for the balancing period; and

(b) in making the assessment, the Commissioner makes an under-assessment; and

the Commissioner may amend the assessment at any time.

214-65 Further amendment of an amended particular

If:

(a) a franking assessment for the entity for the balancing period has been amended (the first amendment ) in any particular; and

(b) the Commissioner is of the opinion that it would be just to further amend the assessment in that particular so as to reduce the assessment;

the Commissioner may do so within a period of 3 years after the first amendment.

214-70 Other later amendments

In a case not covered by sections 214-50, 214-55, 214-60 or 214-65, the Commissioner may amend the franking assessment for the entity for the balancing period after the period of 3 years after the original assessment day has expired, but not so as to reduce the assessment.

214-75 Amendment on review etc.

Nothing in this Division prevents the amendment of a franking assessment for the entity for the balancing period:

(a) to give effect to a decision on a review or appeal; or

(b) to reduce the assessment as a result of an objection made under this Act or pending an appeal or review.

214-80 Notice of amendments

(1) If the Commissioner amends the entity's franking assessment for the balancing period, the Commissioner must give the entity notice of the amendment as soon as practicable after making the amendment.

(2) The notice may be included in a notice of any other assessment under this Act.

214-85 Validity of assessment

The validity of a franking assessment for the entity for the balancing period is not affected because any of the provisions of this Act (as defined in the Income Tax Assessment Act 1997) have not been complied with.

214-90 Objections

If a corporate tax entity is dissatisfied with a franking assessment made in relation to the entity under this Division, the entity may object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953.

214-95 Evidence

Section 177 of the Income Tax Assessment Act 1936 applies as if:

(a) a reference in that section to a return included a reference to a franking return under this Division; and

(b) a reference in that section to an assessment or a notice of assessment included a reference to a franking assessment or a notice of a franking assessment (as required) under this Division.

214-100 Due date for payment of franking tax

General rule

(1) Unless this section provides otherwise, franking deficit tax assessed for the entity because of events that have occurred, or are taken to have occurred, during the balancing period is due and payable on the last day of the month immediately following the end of the balancing period.

Amended assessments - other than because of deficit deferral

(2) If:

(a) the Commissioner amends a franking assessment for the entity for the balancing period (the earlier assessment ) other than because of the operation of section 214-30 (an amendment because of a refund of tax that affects franking deficit tax liability); and

(b) the amount of franking deficit tax payable under the amended assessment exceeds the amount of franking deficit tax payable under the earlier assessment;

the excess amount is due and payable one month after the day on which the assessment was amended.

Tax payable because of deficit deferral

(3) If:

(a) the entity receives a refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3);

the franking deficit tax or, if there is an increase in an existing liability to pay franking deficit tax, the difference between the original liability and the increased liability, is due and payable on:

(c) if the entity accounts for the liability, or increased liability, in a franking return that is outstanding for the balancing period in which the liability arose - the day on which the outstanding return is required to be given to the Commissioner; or

(d) in any other case - 14 days after the day on which the refund was received.

214-105 General interest charge

If:

(a) franking deficit tax that is payable by the entity remains unpaid after the time by which it is due and payable; and

(b) the Commissioner has not allocated the unpaid amount to an RBA;

the entity is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(d) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the franking deficit tax;

(ii) general interest charge on any of the franking deficit tax.

Note: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953.

214-110 Refunds of amounts overpaid

Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if references in that section to tax included references to franking deficit tax.

214-115 Security for payment of tax

In section 213 of the Income Tax Assessment Act 1936 (under which the Commissioner may require security for the payment of income tax), a reference to income tax includes a reference to franking tax.

214-120 Record keeping

Section 262A of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if:

(a) the reference in that section to a person carrying on a business were a reference to a corporate tax entity; and

(b) the reference in paragraph (2)(a) of that section to the person's income and expenditure were a reference to:

(i) the entity's franking account balance; and

(ii) the entity's liability to pay franking tax; and

214-125 Power of Commissioner to obtain information

Section 264 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Division.

214-130 Tax agents

Part VIIA of the Income Tax Assessment Act 1936 applies in relation to a return given, or objection made, for the purposes of this Division as it applies to an income tax return or objection.

214-135 Interpretation

If an expression is defined in this Division, it has the meaning given in that definition, and not the meaning given in the Income Tax Assessment Act 1997.

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