Income Tax Assessment Act 1997
CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-6
-
THE IMPUTATION SYSTEM
Division 205
-
Franking accounts, franking deficit tax liabilities and the related tax offset
Operative provisions
SECTION 205-30
Franking debits
205-30(1)
The following table sets out when a debit arises in the *franking account of an entity and the amount of the debit. The debit is called a franking debit .
205-30(2)
Despite item 2 of the table in subsection (1) , no debit arises on that part of the refund that is attributable to any of the following: (a) a payment of income tax in relation to an *RSA component; (b) a *tax offset that is subject to the refundable tax offset rules because of section 67-30 (about R & D).
205-30(3)
The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.
View history note
Hide history noteThe following table sets out when a debit arises in the *franking account of an entity and the amount of the debit. The debit is called a franking debit .
| Debits in the franking account | |||
| Item | If: | A debit of: | Arises: |
| 1 | the entity *franks a *distribution | the amount of the *franking credit on the distribution | on the day on which the distribution is made |
| 2 | the entity *receives a refund of income tax; and
the entity satisfies the *residency requirement for the income year to which the refund relates; and the entity was a *franking entity during the whole or part of the income year to which the refund relates |
that part of the refund that is attributable to the period during which the entity was a franking entity | on the day on which the refund is received |
| 2A | the entity
*
receives a
*
tax offset refund; and
the entity does not satisfy the * residency requirement for the income year to which the refund relates; and the entity was a * franking entity during the whole or part of the income year to which the refund relates; and the entity ' s * franking account is in * surplus on the day on which the refund is received |
the lesser of:
(a) that part of the refund that is attributable to the period during which the entity was a franking entity; and (b) the amount of the * franking surplus |
on the day on which the refund is received |
| 3 | a *franking debit arises for the entity under paragraph 203-50(1)(b) (the entity *franks a *distribution in contravention of the *benchmark rule) | the franking debit worked out under paragraph 203-50(2)(b) | on the day specified in subsection 203-50(4) |
| 4 | the entity ceases to be a *franking entity; and
the entity ' s *franking account is in *surplus immediately before ceasing to be a franking entity |
the amount of the *franking surplus | on the day on which the entity ceases to be a franking entity |
| 5 | a *franking debit arises for the entity under section 204-15 (linked distributions) | the franking debit specified in subsection 204-15(3) | on the day specified in subsection 204-15(4) |
| 6 | a *franking debit arises under section 204-25 (debit for substituting *tax-exempt bonus shares for *franked distributions) | the amount of the debit specified in subsection 204-25(2) | on the day specified in subsection 204-25(3) |
| 7 | the Commissioner makes a determination under paragraph 204-30(3)(a) giving rise to a *franking debit for the entity (streaming distributions) | the amount of the debit specified in the determination | on the day specified in section 204-35 |
| 7A | a *franking debit arises under subsection 197-45(1) because an amount to which Division 197 applies is transferred to a company ' s *share capital account | the amount of the debit specified in subsection 197-45(2) | at the time provided by subsection 197-45(1) |
| 7B | a *franking debit arises under subsection 197-65(2) because a company chooses to untaint its *share capital account | the amount of the debit specified in subsection 197-65(3) | at the time provided by subsection 197-65(2) |
| 8 | (Repealed by No 79 of 2007 ) | ||
| 9 | (a) the entity purchases a *membership interest in itself; and
(b) the purchase is an *on-market buy-back; and (c) the entity is a company |
an amount equal to the debit that would have arisen if:
(a) the purchase of the interest were a *frankable distribution equal to the one that would have arisen if the entity: (i) purchased the interest *off-market; and (ii) in the case of a *listed public company - were not a listed public company; and (b) the distribution were *franked at the entity ' s *benchmark franking percentage for the *franking period in which the purchase was made or, if the entity does not have a benchmark franking percentage for the period, at a *franking percentage of 100% |
on the day on which the interest is purchased |
| 9A | (a) the entity purchases a *membership interest in itself; and
(b) the purchase is an *off-market buy-back; and (c) the entity is a *listed public company |
an amount equal to the debit that would have arisen if:
(a) the purchase of the interest were a *frankable distribution equal to the one that would have arisen if the entity were not a listed public company; and (b) the distribution were *franked at the entity ' s *benchmark franking percentage for the *franking period in which the purchase was made or, if the entity does not have a benchmark franking percentage for the period, at a *franking percentage of 100% |
on the day on which the interest is purchased |
| 9B | the entity makes a *distribution to which paragraph 202-45(k) applies (consideration for cancellation of membership interest as part of selective reduction of capital) | an amount equal to the debit that would have arisen if:
(a) the distribution were a *frankable distribution equal to the one that would have arisen if the entity were not a *listed public company; and (b) the distribution were *franked at the entity ' s *benchmark franking percentage for the *franking period in which the distribution was made or, if the entity does not have a benchmark franking percentage for the period, at a *franking percentage of 100% |
on the day on which the distribution is made |
| 10 | a *franking debit arises under section 316-260 for the *friendly society or one of its *wholly-owned subsidiaries because the *franking account of the society or subsidiary is in *surplus | the amount of the debit specified in subsection 316-260(2) | at the time provided by subsection 316-260(3) |
| 11 | a *franking debit arises under section 316-265 for the *friendly society or one of its *wholly-owned subsidiaries because a *franking credit arises for the society or subsidiary | the amount of the debit specified in subsection 316-265(3) | at the time provided by subsection 316-265(4) |
| 12 | a *franking debit arises under section 316-270 for the *friendly society or one of its *wholly-owned subsidiaries because a *franking credit arises for the society or subsidiary | the amount of the debit specified in subsection 316-270(3) | at the time provided by subsection 316-270(4) |
| 13 | the entity *receives a refund of diverted profits tax; and
the entity satisfies the *residency requirement for the income year to which the refund relates; and the entity was a *franking entity during the whole or part of the income year to which the refund relates |
that part of the refund that is attributable to the period during which the entity was a franking entity, multiplied by the proportion worked out under subsection (3) | on the day on which the refund is received |
Note:
For completeness, the table refers to some franking debits that arise under other sections of the Act. This does not mean that separate franking debits arise both under the relevant section and this table.
205-30(2)
Despite item 2 of the table in subsection (1) , no debit arises on that part of the refund that is attributable to any of the following: (a) a payment of income tax in relation to an *RSA component; (b) a *tax offset that is subject to the refundable tax offset rules because of section 67-30 (about R & D).
205-30(3)
The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.