CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-6
-
THE IMPUTATION SYSTEM
History
Pt 3-6 inserted by No 48 of 2002.
Division 219
-
Imputation for life insurance companies
History
Div 219 inserted by No 101 of 2004, s 3 and Sch 7 item 4, effective 30 June 2003 and, subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997
set out in the
Income Tax (Transitional Provisions) Act 1997
, applicable to events that occur on or after 1 July 2002.
Subdivision 219-B
-
Franking accounts of life insurance companies
History
Subdiv 219-B inserted by No 101 of 2004, s 3 and Sch 7 item 4, effective 30 June 2003 and, subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997
set out in the
Income Tax (Transitional Provisions) Act 1997
, applicable to events that occur on or after 1 July 2002.
SECTION 219-70
Tax offset under section 205-70
219-70(1)
For the purposes of paragraph
205-70(1)(c)
, if a *life insurance company was entitled to a *tax offset under section
205-70
for a previous income year, assume section
63-10
applied to the part of the company
'
s basic income tax liability for that previous income year that was attributable to its shareholders.
219-70(2)
In working out the part of the company
'
s basic income tax liability that was attributable to its shareholders, have regard to the company
'
s accounting records.
Example:
The following apply to a life insurance company that satisfies the residency requirement for an income year:
(a) the company has a tax offset of $60,000 under section
205-70
(the franking deficit offset) for that year;
(b) the company
'
s basic income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;
(c) 20% of the $100,000 is attributable to the company
'
s shareholders (the shareholders
'
part).
As a result of applying $20,000 of the franking deficit offset to reduce the shareholders
'
part to nil, the company
'
s basic income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.
History
S 219-70 substituted by No 110 of 2014, s 3 and Sch 5 item 108, applicable in relation to the 2006-07 income year and later income years. S 219-70 formerly read:
SECTION 219-70 Tax offset under section 205-70
219-70(1)
In applying section
205-70
to a *life insurance company, that section has effect as if:
(a)
the reference in paragraph
205-70(1)(c)
to the amount that would have been an entity
'
s income tax liability for a previous income year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders; and
(b)
the reference in subsection
205-70(3)
to the amount that would have been an entity
'
s income tax liability for the relevant year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders.
219-70(2)
In working out the part of an amount that is attributable to the company
'
s shareholders for the purposes of this section, regard is to be had to the accounting records of the company.
Example:
The following apply to a life insurance company that satisfies the residency requirement for an income year:
•
the company has a tax offset of $60,000 under section
205-70
(the
franking deficit offset
) for that year;
•
the company
'
s income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;
•
20% of the $100,000 is attributable to the company
'
s shareholders (the
shareholders
'
part
).
As a result of applying $20,000 of the franking deficit offset to reduce the shareholders
'
part to nil, the company
'
s income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.
S 219-70 inserted by No 107 of 2003.