INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 5 - Franking of dividends  

Subdivision BA - Deficit deferral tax  

SECTION 160AQJC   CLASS C DEFICIT DEFERRAL TAX  

160AQJC(1)   [Class C deficit deferral amount arises]  

If:

(a) during a franking year (the first franking year ) a company pays one or more instalments under section 221AZK for the 1995-96 year of income or a later year of income; and

(b) at a particular time during the next franking year (the second franking year ) the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ ; and

(c) assuming that the refund, together with any previous refund of one or more instalments for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class C franking deficit, or an increased class C franking deficit, at the end of the first franking year;

a class C deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.

160AQJC(1A)   [PAYG instalment variation credit]  

If:

(a) during a franking year (the first franking year ) a company pays one or more PAYG instalments in respect of a year of income; and

(b) at a particular time during the next franking year (the second franking year ), a PAYG instalment variation credit for the company arises in relation to the instalment or one or more of the instalments; and

(c) the company would have had a class C franking deficit, or an increased class C franking deficit, at the end of the first franking year assuming that the PAYG instalment variation credit, together with any previous PAYG instalment variation credit in respect of the year of income, had arisen on the last day of the first franking year;

a class C deficit deferral amount (defined in subsection (2)) arises in relation to the company and the PAYG instalment variation credit.

160AQJC(2)   [Class C deficit deferral amount]  

The class C deficit deferral amount is the amount of the class C franking deficit, or the amount of the increase in the class C franking deficit, referred to in paragraph (1)(c) or (1A)(c).

160AQJC(2A)   [Pooled Development Funds]  

If the company is a PDF, the class C deficit deferral amount is reduced by the extent (if any) to which the refund gives rise to, or increases, a liability of the PDF to venture capital deficit tax because of the operation of subsection 4(2) of the Venture Capital Deficit Tax Act. The reduction under this subsection is reduced by the extent (if any) to which the refunds produced a reduction in the PDF's class C franking deficit tax under subsection 160AQJ(1C) .

160AQJC(3)   [Liability to class C deficit deferral tax]  

If a class C deficit deferral amount arises in relation to a company and a refund or PAYG instalment variation credit, the company is liable to pay class C deficit deferral tax in relation to the refund or PAYG instalment variation credit. The amount of the tax is the gross class C deficit deferral amount (see subsection (4)) reduced by any class C deficit deferral tax already payable by the company in relation to refunds or PAYG instalment variation credits received in the second franking year.

160AQJC(4)   [Gross class C deficit deferral amount]  

The gross class C deficit deferral amount is worked out using the formula:

Class C deficit deferal amount   ×

30     70

160AQJC(5)   [Amount treated as part of tax instalment]  

If an amount is paid under subsection 221AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.