Income Tax Assessment Act 1997
View history note
Hide history noteThis section applies in relation to the *franking account of a *life insurance company if:
(a) the assessment of the company ' s *income tax liability for an income year is amended on a particular day (the adjustment day ); and
(b) the *shareholders ' ratio (the new ratio ) based on the amended assessment is different from the shareholders ' ratio used previously in relation to that income year to work out a *franking credit or *franking debit for the company; and
(c) the franking account would have a different balance on the adjustment day if the new ratio had been used to work out all the franking credits and franking debits covered by paragraph (b).
Note:
The operation of this section is affected by section 219-75 if a tax offset under section 205-70 is, or has been, applied to work out the company ' s income tax liability.
219-55(2)
On the adjustment day, a *franking credit or *franking debit (as appropriate) of the amount worked out under subsection (3) arises in the *franking account.
219-55(3)
The amount is an adjustment that will bring the *franking account to the balance that it would have on the adjustment day if the new ratio had been used to work out all the *franking credits and *franking debits covered by paragraph (1)(b).
Example:
On the basis of a shareholders ' ratio of 60% for the income year, franking credits of the amounts of $6,000, $6,000, $6,000 and $6,000 arose under item 2 of the table in section 219-15 for Company X.
An amended assessment results in a new shareholders ' ratio of 70%. Under this section, a franking credit of $4,000 arises on the day of the amended assessment to bring the balance of the franking account from $24,000 to $28,000, which would be the account ' s balance if the new shareholders ' ratio had been used.
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