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  • Total franking credits for subsidiary members moving in and out of the consolidation regime



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    When a corporate tax entity becomes a subsidiary member of a consolidated group, it must determine its franking account balance just before the time of entry (the 'joining time'). If the subsidiary has a deficit balance in its franking account just before the joining time, it is liable to pay franking deficit tax. The period during the income year before the joining time or after exit from the consolidated group is a 'non-membership period'. If there is a liability to pay franking deficit tax the subsidiary must show at label A the total franking credits that arose during the non-membership period ending immediately before the joining time. During the period in which a corporate tax entity is a subsidiary member of a consolidated group, its franking account is inoperative.

    Where a corporate tax entity has operated outside the group for more than one non-membership period during a particular income year, the amount of franking credits that arose for that year is worked out by calculating the amount of franking credits that arose for each non-membership period. The subsidiary member's total franking credits received for the income year, shown at label A, is the total of each of the credits that arose in each non-membership period.

    Note: The amount shown at label A-Credits that arose in your franking account for the period in this franking account tax return does not necessarily equal the amount shown at item 7, label J-Franking credits on the Company tax return 2004. Amounts at label A relate to all the franking credits that arose in the franking account during the period to which this franking account tax return relates. By contrast, item 7, label J in the company tax return relates only to franking credits that arose because of franked distributions received during the income year.

    Last modified: 02 Oct 2019QC 17477