Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 220 - Imputation for NZ resident companies and related companies  

Subdivision 220-C - Modifications of other Divisions of this Part  

Joint and several liability for NZ resident company's unmet franking liabilities

SECTION 220-800   Joint and several liability for NZ resident company's franking tax etc.  

220-800(1)    
This section has effect if:

(a) a company (the defaulter ) became liable under another section to pay an amount described in subsection (2) because the company was an *NZ franking company; and

(b) the amount was unpaid by the time (the defaulter's due time ) it was due and payable by the defaulter; and

(c) at any time during the period for the amount (see subsection (2)), the defaulter was a member of the same *wholly-owned group as one or more other companies (each of which is a contributor ).

220-800(2)    
For the purposes of subsection (1), the amount and period are shown in the table:

Amount and period
Item	For an amount of this kind:	The period is:
1	*Franking deficit tax	Whichever of these periods is relevant: (a) if the defaulter was liable to pay the tax because its franking account was in deficit at the end of an income year - that income year; (b) if the defaulter was liable to pay the tax because of another event - the period starting at the start of the income year in which the event occurred and ending when the event occurred
2	*Over-franking tax	The income year in which the defaulter made the *frankable distribution that made the defaulter liable to pay the tax
3	*General interest charge on *franking deficit tax or *over-franking tax	The period identified under item 1 or 2 for the tax
4	Administrative penalty that: (a) is mentioned in section 284-75, 284-145, 286-75 or 288-25 in Schedule 1 to the Taxation Administration Act 1953 ; and (b) relates entirely to *franking deficit tax or *over-franking tax	The period identified under item 1 or 2 for the tax

220-800(3)    
Just after the defaulter's due time, these companies become jointly and severally liable to pay the unpaid amount:

(a) the defaulter;

(b) each contributor, other than one that, at that time:

(i) is neither an Australian resident nor an *NZ resident; or

(ii) is prohibited by an *Australian law or a law of New Zealand from entering into an *arrangement that would make the contributor jointly or severally liable for the unpaid amount.

220-800(4)    
The joint and several liability of a particular contributor becomes due and payable by the contributor 14 days after the Commissioner gives it written notice of the liability.

Note 1:

Two or more contributors will have different due and payable dates for the same liability if the Commissioner gives them notice of their liability on different days.

Note 2:

This section does not affect the time at which the liability for the unpaid amount arose for, or became due and payable by, the defaulter.

220-800(5)    
If:

(a) the unpaid amount (the first interest amount ) is *general interest charge for a day in relation to another unpaid amount (the primary liability ) that consists of *franking deficit tax or *over-franking tax; and

(b) on a day the Commissioner gives a particular contributor written notice under subsection (4) of the contributor's liability for the first interest amount; and

(c) general interest charge arises:

(i) for a day (the later day ) after the days mentioned in paragraphs (a) and (b); and

(ii) in relation to the primary liability; and

(d) the general interest charge for the later day has not been paid or otherwise discharged in full by the time it became due and payable;

the Commissioner is taken to have given the contributor written notice under subsection (4) of the general interest charge for the later day on that later day.

220-800(6)    
Section 254 of the Income Tax Assessment Act 1936 applies in relation to the contributors ' liability as if it were a liability for tax.

Note:

Section 254 of the Income Tax Assessment Act 1936 deals with the payment of tax by agents and trustees.