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Late balancer calculating an FDT offset

Last updated 31 July 2023

How you calculate your franking deficit tax (FDT) as a late balancer.

Options for calculating

If you have elected to have your franking deficit tax (FDT) liability determined on 30 June, there are special rules to calculate your FDT offset.

If you have not elected, the normal rules apply to calculate your FDT offset. This is in place for the 2003–04 and later income years. See Franking deficit tax offset calculations, reduction rule and exclusions.

Late balancers with a 30 June FDT election

For late balancers who elected to have their FDT liability determined on 30 June, there are special rules to calculate your FDT liability.

These special rules (see calculation method below) for late balancers who have made a 30 June election take into account FDT liabilities incurred on or before 30 June. They then consider FDT liabilities that are incurred after 30 June in the income year. The method statement is set out in section 205-70(4) of the Income Tax (Transitional Provisions) Act 1997.

Calculation method for late balancers with a 30 June election

Step

Calculation

Step 1

Work out the amount of FDT the entity has incurred a liability to pay in the income year, incurred on or before 30 June in that income year.

Reduce this amount by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account during the 12 months immediately preceding that 30 June.

Step 2

Work out the amount of FDT the entity has incurred as a liability to pay in the income year, incurred after 30 June in that income year.

Reduce this amount by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account after 30 June and before the end of the last day on which the entity incurred a franking deficit tax liability in the relevant year.

Step 3

Work out the amount of FDT liability that the entity incurred in a previous income year where it did not satisfy the residency requirement and the liability has not been taken into account in working out a tax offset under section 205-70 ITAA 1997 that was incurred on or before 30 June in that previous year.

Reduce this amount by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account during the 12 months immediately preceding that 30 June.

Step 4

Work out the amount of FDT liability that the entity incurred in a previous income year for which it did not satisfy the residency requirement, and that a liability has not been taken into account in working out a tax offset under section 205-70 ITAA 1997 that was incurred after 30 June in that previous year.

Reduce this amount by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account after 30 June, and before the end of the last day on which the entity incurred a franking deficit tax liability in that previous year.

Step 5

Add up the results of steps 3 and 4 for all the previous years in which it incurred a liability for FDT that has not been taken into account in working out a tax offset, and did not satisfy the residency requirement.

Step 6

Work out the amount of any FDT offset that the entity was entitled to in a previous income year under section 205-70 ITAA 1997 that remains unused..

Step 7

Add up the results of steps 1, 2, 5 and 6. The result is the FDT offset to which the entity is entitled for the income year.

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