Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 220 - Imputation for NZ resident companies and related companies  

Subdivision 220-C - Modifications of other Divisions of this Part  

NZ franking companies ' franking accounts etc.

SECTION 220-215   Effect on franking account if NZ franking choice ceases to be in force  

220-215(1)    
This section has effect if:

(a) a company has made an * NZ franking choice; and

(b) the choice is revoked or cancelled at a time (the end time ); and

(c) immediately before the end time the company is a foreign resident.

Franking debit if franking surplus just before end time

220-215(2)    
A * franking debit arises in the company ' s * franking account on the day during which the end time occurs if the account was in * surplus immediately before that time. The amount of the debit equals the * franking surplus.

Franking deficit tax if franking deficit just before end time

220-215(3)    
If the company ' s * franking account was in * deficit immediately before the end time, subsection 205-45(3) applies in relation to the company as if it ceased to be a * franking entity at the end time.

Note:

Subsection 205-45(3) makes an entity liable to pay franking deficit tax if the entity ceases to be a franking entity and had a franking deficit immediately before ceasing to be a franking entity.

220-215(4)    
Subsection (3) does not limit the effect of subsection 205-45(3) .

Take account of franking debit arising under section 220-605

220-215(5)    
Take account of any * franking debit arising under section 220-605 because of the revocation or cancellation in working out for the purposes of this section whether the company ' s * franking account is in * surplus or * deficit immediately before the end time.

Note:

Section 220-605 provides for a franking debit to arise in the company ' s franking account immediately before the end time if, immediately before the end time, the company was a former exempting entity and its exempting account was in deficit.