A corporate tax entity is entitled to a tax offset for an income year for which it satisfies the residency requirement and at least one of the following:
- the entity has incurred a liability to pay FDT in that year
- the entity has carried forward an amount of excess FDT offset that was unable to be applied against an income tax liability in a previous income year
- the entity incurred a liability to pay FDT in a previous income year when it did not meet the residency requirement, and was therefore not entitled to an FDT offset for that income year.
Broadly, an entity satisfies the residency requirement if it is an Australian resident for more than half an income year. If the entity existed for less than six months, it would pass the residency requirement if it was a resident at all times during the year when it existed.