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

Schedule 28 Machinery provisions for simplified imputation system

Income Tax Assessment Act 1997

3 After Division 210

Insert:

Division 214 - Administering the imputation system

Table of Subdivisions

Guide to Division 214

214-A Franking returns

214-B Franking assessments

214-C Amending franking assessments

214-D Collection and recovery

214-E Records, information and tax agents

Guide to Division 214

Table of sections

214-1 Purpose of the system

214-5 Key features

214-1 Purpose of the system

These provisions:

(a) allow the Commissioner to gather sufficient information to determine whether tax is payable by a corporate tax entity under the imputation system; and

(b) provide for the Commissioner to assess the amount of tax that is payable; and

(d) establish systems to support the assessment and collection of the tax.

214-5 Key features

(1) Initial information about a corporate tax entity's franking activities is provided by means of a return, called a franking return, given by the entity to the Commissioner.

(2) The Commissioner is able to require corporate tax entities to give a franking return for an income year by publishing a notice in the Gazette.

(3) The Commissioner is also able to require a particular corporate tax entity to give a franking return for one or more income years. The Commissioner might do this, for example, if the Commissioner wishes to audit the corporate tax entity's franking activities over a number of years.

(4) The Commissioner may assess whether tax is payable under the imputation system and the amount of that tax.

(5) In most cases, this is done by treating the first return of a corporate tax entity for an income year as an assessment by the Commissioner. To this extent, there is self-assessment.

(6) An assessment by the Commissioner is conclusive evidence of a corporate tax entity's tax liabilities under the imputation system, except for the purposes of objection, review and appeal processes under Part IVC of the Tax Administration Act 1953 (see section 177 of the Income Tax Assessment Act 1936 and sections 214-50 and 214-85 of this Act).

(7) Assessments can be amended by the Commissioner within certain time limits.

Subdivision 214-A - Franking returns

Guide to Subdivision 214-A

214-10 What this Subdivision is about

A franking return for an income year provides the Commissioner with information about a corporate tax entity's franking activities during that year.

Table of sections

Operative provisions

214-15 Notice to give a franking return - general notice

214-20 Notice to a specific corporate tax entity

214-25 Content and form of a franking return

214-30 Franking account balance

214-35 Venture capital sub-account balance

214-40 Meaning of franking tax

214-45 Effect of a refund on franking returns

214-50 Evidence

[This is the end of the Guide.]

Operative provisions

214-15 Notice to give a franking return - general notice

(1) The Commissioner may publish a notice in the Gazette requiring each *corporate tax entity to which the notice applies to give the Commissioner a *franking return for an income year specified in the notice.

(2) An entity to which the notice applies must comply with the requirement within the time specified in the notice, or within any further time allowed by the Commissioner.

214-20 Notice to a specific corporate tax entity

(1) The Commissioner may give a *corporate tax entity a written notice requiring the entity to give the Commissioner a *franking return for an income year specified in the notice.

(2) The entity must comply with the requirement within the time specified in the notice, or within any further time allowed by the Commissioner.

(3) The entity must comply with the requirement regardless of whether the entity has given, or has been required to give, the Commissioner a return under section 214-15.

214-25 Content and form of a franking return

(1) A *corporate tax entity must include the following information in its *franking return for an income year:

(a) if the entity is a *franking entity at the end of the income year - its *franking account balance at the end of the income year; and

(b) if the entity ceased to be a franking entity during the income year - its franking account balance immediately before it ceased to be a franking entity; and

(c) if the entity is a *PDF at the end of the income year - its *venture capital sub-account balance at the end of the income year; and

(d) if the entity ceased to be a PDF during the income year - its venture capital sub-account balance immediately before it ceased to be a PDF; and

(e) the amounts (if any) of *franking tax which the entity is liable to pay because of events that have occurred, or are taken to have occurred, during the income year; and

(f) any other information required by the Commissioner for the purposes of administering this Part.

(2) The return must be in writing in the approved form.

214-30 Franking account balance

A *corporate tax entity's franking account balance at a particular time is:

(a) if the entity has a *franking surplus or a *franking deficit at that time - the amount of the surplus or deficit; or

(b) if the entity does not have a franking surplus or a franking deficit at that time - nil.

214-35 Venture capital sub-account balance

A *PDF's venture capital sub-account balance at a particular time is:

(a) if the PDF has a *venture capital surplus or a *venture capital deficit at that time - the amount of the surplus or deficit; or

(b) if the entity does not have a venture capital surplus or a venture capital deficit at that time - nil.

214-40 Meaning of franking tax

Each of the following is a franking tax :

(a) *franking deficit tax;

(b) *over-franking tax;

214-45 Effect of a refund on franking returns

If no franking return is outstanding

(1) If:

(a) a *corporate tax entity receives a *refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay *franking deficit tax because of the operation of subsection 205-50(2) or (3); and

(c) when the refund is received, the entity does not have a *franking return that is *outstanding for the income year in which the liability arose;

the entity must give the Commissioner a franking return for the income year within 14 days after the refund is received.

Refund received within 14 days before an outstanding franking return is due

(2) If:

(a) an entity receives a *refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay *franking deficit tax because of the operation of subsection 205-50(2) or (3); and

(c) when the refund is received, the entity has a *franking return that is *outstanding for the income year in which the liability arose; and

(d) the entity receives the refund within the period of 14 days ending on the day by which the outstanding return must be given to the Commissioner;

the entity may, instead of accounting for the liability, or increased liability, in the outstanding return, account for it in a further return given to the Commissioner within 14 days after the refund is received.

Meaning of outstanding

(3) A *franking return for an income year is outstanding at a particular time if each of the following is true at that time:

(a) the *corporate tax entity has been required to give a *franking return for the income year;

(b) the time within which the franking return must be given has not yet passed;

214-50 Evidence

Section 177 of the Income Tax Assessment Act 1936 applies as if a reference in that section to a return included a reference to a *franking return.

Subdivision 214-B - Franking assessments

Guide to Subdivision 214-B

214-55 What this Subdivision is about

The Commissioner may make an assessment of a corporate tax entity's liability to pay franking tax, and the franking account balance and the venture capital sub-account balance on which that liability is based. An entity's first return for an income year is treated as an assessment by the Commissioner. To this extent, there is self-assessment.

Table of sections

Operative provisions

214-60 Commissioner may make a franking assessment

214-65 Commissioner taken to have made a franking assessment on first return

214-70 Part-year assessment

214-75 Validity of assessment

214-80 Objections

214-85 Evidence

[This is the end of the Guide.]

Operative provisions

214-60 Commissioner may make a franking assessment

(1) The Commissioner may make an assessment of:

(a) if a *corporate tax entity is a *franking entity at the end of the income year - its *franking account balance at the end of the income year; and

(b) if a corporate tax entity ceased to be a franking entity during the income year - its franking account balance immediately before it ceased to be a franking entity; and

(c) if a corporate tax entity is a *PDF at the end of the income year - its *venture capital sub-account balance at the end of the income year; and

(d) if a corporate tax entity ceased to be a PDF during the income year - its venture capital sub-account balance immediately before it ceased to be a PDF; and

(e) the amounts (if any) of *franking tax which the entity is liable to pay because of events that have occurred, or are taken to have occurred, during the income year.

This is a franking assessment for the entity for the income year.

(2) The Commissioner must give the entity notice of the assessment as soon as practicable after making the assessment.

(3) The notice may be included in a notice of any other assessment under this Act.

214-65 Commissioner taken to have made a franking assessment on first return

(1) If:

(a) a *corporate tax entity gives the Commissioner a *franking return for an income year on a particular day (the return day ); and

(b) the return is the first franking return given by the entity for the year; and

the Commissioner is taken to have made a franking assessment for the entity for the year on the return day, and to have assessed:

(d) the entity's *franking account balance at a particular time as that stated in the return as the balance at that time; and

(e) the entity's *venture capital sub-account balance (if any) at a particular time as that stated in the return as the balance at that time; and

(f) the amounts (if any) of *franking tax payable by the entity because of events that have occurred, or are taken to have occurred, during that income year as those stated in the return.

(2) The return is taken to be notice of the assessment signed by the Commissioner and given to the entity on the return day.

214-70 Part-year assessment

(1) The Commissioner may, at any time during an income year, make a *franking assessment for a *corporate tax entity for a particular period within that year as if the beginning and end of that period were the beginning and end of an income year.

(2) This Part applies, for the purposes of that assessment, as if the beginning and end of the period were the beginning and end of an income year.

214-75 Validity of assessment

The validity of a *franking assessment is not affected because any of the provisions of this Act have not been complied with.

214-80 Objections

If a *corporate tax entity is dissatisfied with a *franking assessment made in relation to the entity, the entity may object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953.

214-85 Evidence

Section 177 of the Income Tax Assessment Act 1936 applies as if a reference in that section to an assessment or a notice of assessment included a reference to a *franking assessment or a notice of a franking assessment, as required.

Subdivision 214-C - Amending franking assessments

Guide to Subdivision 214-C

214-90 What this Subdivision is about

The Commissioner may amend franking assessments within certain time limits.

Table of sections

Operative provisions

214-95 Amendments within 3 years of the original assessment

214-100 Amended assessments are treated as franking assessments

214-105 Further return as a result of a refund affecting a franking deficit tax liability

214-110 Later amendments - on request

214-115 Later amendments - failure to make proper disclosure

214-120 Later amendments - fraud or evasion

214-125 Further amendment of an amended particular

214-130 Other later amendments

214-135 Amendment on review etc.

214-140 Notice of amendments

[This is the end of the Guide.]

Operative provisions

214-95 Amendments within 3 years of the original assessment

(1) The Commissioner may amend a *franking assessment for a *corporate tax entity for an income year at any time during the period of 3 years after the *original franking assessment day for the entity for that year.

(2) The original franking assessment day for a *corporate tax entity for an income year is the day on which the first *franking assessment for the entity for the income year is made.

214-100 Amended assessments are treated as franking assessments

Once an amended *franking assessment for a corporate tax entity for an income year is made, it is taken to be a franking assessment for the entity for the year.

214-105 Further return as a result of a refund affecting a franking deficit tax liability

(1) If:

(a) a *franking assessment for a *corporate tax entity for an income year has been made; and

(b) on a particular day (the further return day ) the entity gives the Commissioner a further return for the income year under subsection 214-45(1) (because the entity has received a *refund of income tax that affects its liability to pay *franking deficit tax);

the Commissioner is taken to have amended the entity's franking assessment on the further return day, and to have assessed:

(c) the entity's *franking account balance at a particular time as that stated in the further return as the balance at that time; and

(d) the entity's *venture capital sub-account balance (if any) at a particular time as that stated in the further return as the balance at that time; and

(e) the amounts (if any) of *franking tax payable by the entity because of events that have occurred, or are taken to have occurred, during that income year as those stated in the further return.

(2) The further return is taken to be notice of the amended assessment signed by the Commissioner and given to the entity on the further return day.

214-110 Later amendments - on request

The Commissioner may amend a *franking assessment for a *corporate tax entity for an income year after the end of the period of 3 years after the *original franking assessment day for the entity for the year if, within that 3 year period:

(a) the entity applies for the amendment; and

(b) the entity gives the Commissioner all the information necessary for making the amendment.

214-115 Later amendments - failure to make proper disclosure

(1) If:

(a) a *corporate tax entity does not make a full and true disclosure to the Commissioner of the information necessary for a *franking assessment for the entity for an income year; and

(b) in making the assessment, the Commissioner makes an *under-assessment; and

the Commissioner may amend the assessment at any time during the period of 6 years after the *original franking assessment day for the entity for the year.

(2) The Commissioner makes an under-assessment in a *franking assessment (the earlier assessment ) if, in amending the earlier assessment, the Commissioner would have to do one or more of the following for the amended assessment to be correct:

(a) reduce the *franking surplus (including to a nil balance);

(b) increase the *franking deficit (including from a nil balance);

214-120 Later amendments - fraud or evasion

If:

(a) a *corporate tax entity does not make a full and true disclosure to the Commissioner of the information necessary for a *franking assessment for the entity for an income year; and

(b) in making the assessment, the Commissioner makes an *under-assessment; and

the Commissioner may amend the assessment at any time.

214-125 Further amendment of an amended particular

(1) If:

(a) a *franking assessment has been amended (the first amendment ) in any particular; and

(b) the Commissioner is of the opinion that it would be just to further amend the assessment in that particular so as to *reduce the assessment;

the Commissioner may do so within a period of 3 years after the first amendment.

(2) The Commissioner reduces a franking assessment if the Commissioner amends the assessment by doing one or more of the following:

(a) increasing the *franking surplus (including from a nil balance);

(b) decreasing the *franking deficit (including to a nil balance);

214-130 Other later amendments

In a case not covered by section 214-110, 214-115, 214-120 or 214-125, the Commissioner may amend the *franking assessment for a *corporate tax entity for an income year after the period of 3 years after the *original assessment day has expired, but not so as to *reduce the assessment.

214-135 Amendment on review etc.

Nothing in this Subdivision prevents the amendment of a *franking assessment:

(a) to give effect to a decision on a review or appeal; or

(b) to *reduce the assessment as a result of an objection made under this Act or pending an appeal or review.

214-140 Notice of amendments

(1) If the Commissioner amends an entity's *franking assessment, the Commissioner must give the entity notice of the amendment as soon as practicable after making the amendment.

(2) The notice may be included in a notice of any other assessment under this Act.

Subdivision 214-D - Collection and recovery

Guide to Subdivision 214-D

214-145 What this Subdivision is about

Franking tax is due and payable at certain times and the general interest charge applies to unpaid amounts.

Table of sections

Operative provisions

214-150 Due date for payment of franking tax

214-155 General interest charge

214-160 Refunds of amounts overpaid

214-165 Security for payment of tax

[This is the end of the Guide.]

Operative provisions

214-150 Due date for payment of franking tax

General rule

(1) Unless this section provides otherwise, *franking tax assessed for a *corporate tax entity because of events that have occurred, or are taken to have occurred, during an income year is due and payable on the last day of the month immediately following the end of the income year.

Part-year assessments

(2) *Franking tax payable because of an assessment under section 214-70 (a part-year assessment) is due and payable on the day specified in the notice of assessment as the day on which it is due and payable.

Amended assessments - other than because of deficit deferral

(3) If:

(a) the Commissioner amends a *franking assessment (the earlier assessment ) other than because of the operation of section 214-105 (an amendment because of a refund of tax that affects *franking deficit tax liability); and

(b) the amount of *franking tax of a particular type payable under the amended assessment exceeds the amount of franking tax of that type payable under the earlier assessment;

the excess amount is due and payable one month after the day on which the assessment was amended.

Tax payable because of deficit deferral

(4) If:

(a) a *corporate tax entity receives a *refund of income tax; and

(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay *franking deficit tax because of the operation of subsection 205-50(2) or (3);

the franking deficit tax or, if there is an increase in an existing liability to pay franking deficit tax, the difference between the original liability and the increased liability, is due and payable on:

(c) if the entity accounts for the liability, or increased liability, in a *franking return that is *outstanding for the income year in which the liability arose - the day on which the outstanding return is required to be given to the Commissioner; or

(d) in any other case - 14 days after the day on which the refund was received.

214-155 General interest charge

If:

(a) *franking tax of a particular type payable by a *corporate tax entity remains unpaid after the time by which it is due and payable; and

(b) the Commissioner has not allocated the unpaid amount to an *RBA;

the entity is liable to pay the *general interest charge on the unpaid amount for each day in the period that:

(d) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the franking tax;

(ii) general interest charge on any of the franking tax.

Note: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953.

214-160 Refunds of amounts overpaid

Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if references in that section to tax included references to *franking tax.

214-165 Security for payment of tax

In section 213 of the Income Tax Assessment Act 1936 (under which the Commissioner may require security for the payment of income tax), a reference to income tax includes a reference to *franking tax.

Subdivision 214-E - Records, information and tax agents

Guide to Subdivision 214-E

214-170 What this Subdivision is about

Generally applicable provisions to do with record keeping, information gathering and tax agents apply for the purposes of the imputation system.

Table of sections

Operative provisions

214-175 Record keeping

214-180 Power of Commissioner to obtain information

214-185 Tax agents

[This is the end of the Guide.]

Operative provisions

214-175 Record keeping

(1) Section 262A of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if:

(a) the reference in that section to a person carrying on a business were a reference to a *corporate tax entity; and

(b) the reference in paragraph (2)(a) of that section to the person's income and expenditure were a reference to:

(i) the entity's *franking account balance; and

(ii) the entity's liability to pay *franking tax; and

(2) A *PDF does not need to maintain records under section 262A of the Income Tax Assessment Act 1936 in relation to a *venture capital sub-account if the *PDF does not elect to be a *participating PDF.

214-180 Power of Commissioner to obtain information

Section 264 of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Part.

214-185 Tax agents

Part VIIA of the Income Tax Assessment Act 1936 applies in relation to a return given, or objection made, for the purposes of this Part as it applies to an income tax return or objection.

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