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  

SECTION 205-5   Franking accounts, franking deficit tax liabilities and the related tax offset  

205-5(1)    
Each entity that is, or has ever been, a corporate tax entity has a franking account.

205-5(2)    
The payment of a PAYG instalment or income tax will generate a franking credit in that account. The amount of the credit is equal to the amount of tax paid. The receipt of a franked distribution by an entity from another corporate tax entity will also generate a franking credit. There are other circumstances in which a franking credit arises.

205-5(3)    
The receipt of a refund of income tax or the payment of a franked distribution by a corporate tax entity will generate a franking debit. There are, however, other cases where a franking debit arises. For example, a franking debit might arise under a determination by the Commissioner because distributions have been streamed.

205-5(4)    
An entity must be a franking entity at certain times and satisfy certain residency requirements before a franking credit or debit arises in its account.

205-5(5)    
Franking deficit tax is payable if the franking account of an entity is in deficit at the end of the entity ' s income year, or when the entity ceases to be a franking entity.

205-5(6)    

A tax offset is available to an entity that has incurred a liability to pay franking deficit tax.