FDT offset for late balancers - 2001-02 income year

For all late balancers, the amount of the FDT offset for the 2001-02 income year is calculated using the method statement in subsection 205-70(2) in the Income Tax (Transitional Provisions) Act 1997 as follows:

Step 1 - calculate the amount of any liability to pay FDT that the entity has incurred in the 2001-02 income year.

  • This will include an FDT liability that crystallised under Part IIIAA of the Income Tax Assessment Act 1936 on 30 June 2002.
  • This will also include an FDT liability that arose during the 2001-02 income year as a result of the entity ceasing to be a franking entity.

Step 2 - Add to the Step 1 result the excess covered by 205-70(1)(c) Income Tax Assessment Act 1997 (ie, if the entity was previously entitled to a tax offset that exceeded the income tax liability for that year after taking into account all other tax offsets).

  • To calculate this amount the transitional rules for first year amounts in section 205-75 Income Tax (Transitional Provisions) Act 1997 must first be considered.
  • These first year rules mean that for a late balancing company franking deficit tax liabilities and deficit deferral tax liabilities incurred under the ITAA 1936, but have not previously been applied as a tax offset against the entity's income tax liability, are treated as an excess amount under 205-70(1)(c) ITAA 1997 for the 2001-02 income year. This ensures that amounts of FDT offset that the entity was entitled to under the old imputation rules are brought forward to be included as a tax offset amount under the new SIS rules.

The total of Step 1 and Step 2 is the amount of FDT offset that the entity is entitled to in the 2001-02 income tax assessment.

    Last modified: 04 Nov 2015QC 17295