Tax and Superannuation Laws Amendment (2014 Measures No. 4) Act 2014 (110 of 2014)

Schedule 5  

Part 4   Other amendments of principal Acts

Income Tax Assessment Act 1997

108   Section 219-70

Repeal the section, substitute:

219-70 Tax offset under section 205-70

(1) For the purposes of paragraph 205-70(1)(c), if a *life insurance company was entitled to a *tax offset under section 205-70 for a previous income year, assume section 63-10 applied to the part of the company’s basic income tax liability for that previous income year that was attributable to its shareholders.

(2) In working out the part of the company’s basic income tax liability that was attributable to its shareholders, have regard to the company’s accounting records.

Example: The following apply to a life insurance company that satisfies the residency requirement for an income year:

(a) the company has a tax offset of $60,000 under section 205-70 (the franking deficit offset) for that year;

(b) the company’s basic income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;

(c) 20% of the $100,000 is attributable to the company’s shareholders (the shareholders’ part).

As a result of applying $20,000 of the franking deficit offset to reduce the shareholders’ part to nil, the company’s basic income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.