Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 219 - Imputation for life insurance companies  

SECTION 219-40   Reversing and replacing (on tax paid basis) certain franking credits that arose before 1 July 2002  

219-40(1)    
This section applies if:

(a) a franking credit arose before 1 July 2002 in the franking account of a life insurance company under former section 160APVJ of the Income Tax Assessment Act 1936 in relation to a PAYG instalment in respect of an income year; and

(b) the company's assessment day (the assessment day ) for that income year occurs on or after 1 July 2002; and

(c) the company has a franking account (the new franking account ) under section 205-10 of the Income Tax Assessment Act 1997 .

219-40(2)    
A franking debit of the amount worked out in accordance with the following formula is taken to have arisen in the new franking account on the assessment day:

Amount of the 1936 Act credit     ×

30 70

where:

amount of the 1936 Act credit
means the amount of the franking credit mentioned in paragraph (1)(a).

219-40(3)    
On the assessment day, a franking credit of the amount mentioned in item 2 of the table in section 219-15 of the Income Tax Assessment Act 1997 arises in the new franking account in relation to a payment of the PAYG instalment mentioned in paragraph (1)(a) of this section that was made before 1 July 2002.

Note:

On the assessment day, the franking credit mentioned in paragraph (1)(a) is therefore:

• reversed by the franking debit arising under subsection (2); and

• replaced with a franking credit arising under subsection (3).