New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 27   Venture capital franking

Income Tax (Transitional Provisions) Act 1997

20   After Division 205

Insert:

Division 210 - Venture capital franking

210-1 Order of events provision

The venture capital sub-account of a PDF under Part IIIAA of the Income Tax Assessment Act 1936 (the old sub-account) is closed off at the end of 30 June 2002 and an opening balance is created in the PDF's venture capital sub-account under section 210-100 of the Income Tax Assessment Act 1997 as follows:

(a) any estimated venture capital debits in the old sub-account at the end of 30 June 2002 are washed out of the account under section 210-5; and

(b) then:

(i) in the case of a PDF whose 2001-02 franking year ends on 30 June 2002 under Part IIIAA of the Income Tax Assessment Act 1936 - the PDF's venture capital sub-account balance is converted under section 210-10 to a tax paid basis; and

(ii) in the case of a PDF whose 2001-02 franking year ends before 30 June 2002 under Part IIIAA of the Income Tax Assessment Act 1936 - the PDF's venture capital sub-account balance is converted under section 210-15 to a tax paid basis.

210-5 Washing estimated venture capital debits out of the old sub-account before conversion

If, under Part IIIAA of the Income Tax Assessment act 1936, the termination time in relation to an estimated venture capital debit of a PDF would, but for this section, occur after the end of 30 June 2002, it is taken to have occurred at the end of 30 June 2002.

210-10 Converting the venture capital sub-account balance to a tax paid basis - PDFs whose 2001-02 franking year ends on 30 June 2002

(1) This section applies to PDFs whose 2001-02 franking year ends on 30 June 2002 under Part IIIAA of the Income Tax Assessment Act 1936 (the 1936 Act ).

(2) If the PDF has a venture capital surplus under Part IIIAA of the 1936 Act at the end of 30 June 2002:

(a) no venture capital credit arises under section 160ASEE of that Act because of the surplus; and

(b) a venture capital credit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the Income Tax Assessment Act 1997 for the PDF.

(3) The amount of the venture capital credit is worked out using the following formula:

210-15 Converting the venture capital sub-account balance to a tax paid basis - PDFs whose 2001-02 franking year ends before 30 June 2002

(1) This section applies to PDFs whose 2001-02 franking year ends before 20 June 2002 under Part IIIAA of the Income Tax Assessment 1936 (the 1936 Act ).

(2) If, but for this subsection, the PDF would have a venture capital surplus under Part IIIAA of the 1936 Act at the end of 30 June 2002 (the original surplus ):

(a) a venture capital debit equal to the original surplus is taken to arise for the PDF under Part IIIAA of the 1936 Act at the end of 30 June 2002; and

(b) a venture capital credit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the Income Tax Assessment Act 1997 (the 1997 Act ) for the PDF.

(3) The amount of the venture capital credit is worked out using the formula:

(4) If, but for this subsection, the PDF would have a venture capital deficit under Part IIIAA of the 1936 Act at the end of 30 June 2002 (the original deficit ):

(a) a venture capital credit equal to the original deficit is taken to arise for the PDF under Part IIIAA of the 1936 Act at the end of 30 June 2002; and

(b) a venture capital debit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the 1997 Act for the PDF.

(5) The amount of the venture capital debit is worked out using the formula: