Taxation Laws Amendment Act (No. 1) 2004 (101 of 2004)

Schedule 11   Technical amendments

Part 7   Amendments commencing on Royal Assent

Income Tax (Transitional Provisions) Act 1997

154   After Division 205

Insert:

Division 208 - Exempting entities and former exempting entities

Table of sections

208-111 Converting former exempting company's exempting account balance on 30 June 2002

208-111 Converting former exempting company's exempting account balance on 30 June 2002

(1) This section has effect for the purposes of working out the following for a company that was a former exempting company (as defined in Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:

(a) whether the company has an exempting surplus or an exempting deficit for the purposes of the Income Tax Assessment Act 1997 at a time after 30 June 2002;

(b) the company's class A exempting account balance (as defined in that Part) at a time after 30 June 2002;

(c) the company's class C exempting account balance (as defined in that Part) at a time after 30 June 2002.

Class A exempting surplus at the end of 30 June 2002

(2) If the company had a class A exempting surplus (as defined in Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:

(a) a class A exempting debit equal to the surplus is taken to have arisen immediately before the end of 30 June 2002 for the purposes of that Part; and

(b) an exempting credit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:

Amount of the surplus * (39 / 61)

Note: Section 205-5 (with sections 160APU and 160AQCNM of the Income Tax Assessment Act 1936) may affect whether the company had such a surplus at the end of 30 June 2002 and the amount of that surplus, but this section does not (because this section affects the company's exempting account balance only after then).

Class C exempting surplus at the end of 30 June 2002

(3) If the company had a class C exempting surplus (as defined in Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:

(a) a class C exempting debit equal to the surplus is taken to have arisen immediately before the end of 30 June 2002 for the purposes of that Part; and

(b) an exempting credit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:

Amount of the surplus * (30 / 70)

Note: Section 205-5 (with sections 160APU and 160AQCNM of the Income Tax Assessment Act 1936) may affect whether the company had such a surplus at the end of 30 June 2002 and the amount of that surplus, but this section does not (because this section affects the company's exempting account balance only after then).

Class A exempting deficit at end of 30 June 2002

(4) If the company had a class A exempting deficit (as defined in Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002 and its 2001-02 franking year (as defined in that Part) ended earlier:

(a) a class A exempting credit equal to the deficit is taken to have arisen at the end of 30 June 2002 for the purposes of that Part; and

(b) an exempting debit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:

Amount of the deficit * (39 / 61)

Note: If the company's 2001-02 franking year ended at the end of 30 June 2002 and it would have had a class A exempting deficit at that time apart from section 160AQCNO of the Income Tax Assessment Act 1936, that section will have eliminated the deficit and either:

(a) increased the company's liability for franking deficit tax; or

(b) reduced the franking credit arising under section 205-10 of this Act in the franking account the company has under the Income Tax Assessment Act 1997.

Class C exempting deficit at end of 30 June 2002

(5) If the company had a class C exempting deficit (as defined in Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002 and its 2001-02 franking year (as defined in that Part) ended earlier:

(a) a class C exempting credit equal to the deficit is taken to have arisen at the end of 30 June 2002 for the purposes of that Part; and

(b) an exempting debit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:

Amount of the deficit * (30 / 70)

Note: If the company's 2001-02 franking year ended at the end of 30 June 2002 and it would have had a class C exempting deficit at that time apart from section 160AQCNO of the Income Tax Assessment Act 1936, that section will have eliminated the deficit and either:

(a) increased the company's liability for franking deficit tax; or

(b) reduced the franking credit arising under section 205-10 of this Act in the franking account the company has under the Income Tax Assessment Act 1997.