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  

Joint and several liability for NZ resident company's unmet franking liabilities

SECTION 220-800   Joint and several liability for NZ resident company's franking tax etc.  

220-800(1)  
This section has effect if:


(a) a company (the defaulter ) became liable under another section to pay an amount described in subsection (2) because the company was an *NZ franking company; and


(b) the amount was unpaid by the time (the defaulter's due time ) it was due and payable by the defaulter; and


(c) at any time during the period for the amount (see subsection (2)), the defaulter was a member of the same *wholly-owned group as one or more other companies (each of which is a contributor ).

220-800(2)  
For the purposes of subsection (1), the amount and period are shown in the table:


Amount and period
Item For an amount of this kind: The period is:
1 *Franking deficit tax Whichever of these periods is relevant:

(a) if the defaulter was liable to pay the tax because its franking account was in deficit at the end of an income year - that income year;

(b) if the defaulter was liable to pay the tax because of another event - the period starting at the start of the income year in which the event occurred and ending when the event occurred
2 *Over-franking tax The income year in which the defaulter made the *frankable distribution that made the defaulter liable to pay the tax
3 *General interest charge on *franking deficit tax or *over-franking tax The period identified under item 1 or 2 for the tax
4 Administrative penalty that:

(a) is mentioned in section 284-75, 284-145, 286-75 or 288-25 in Schedule 1 to the Taxation Administration Act 1953 ; and

(b) relates entirely to *franking deficit tax or *over-franking tax
The period identified under item 1 or 2 for the tax

220-800(3)  
Just after the defaulter's due time, these companies become jointly and severally liable to pay the unpaid amount:


(a) the defaulter;


(b) each contributor, other than one that, at that time:


(i) is neither an Australian resident nor an *NZ resident; or

(ii) is prohibited by an *Australian law or a law of New Zealand from entering into an *arrangement that would make the contributor jointly or severally liable for the unpaid amount.

220-800(4)  
The joint and several liability of a particular contributor becomes due and payable by the contributor 14 days after the Commissioner gives it written notice of the liability.

Note 1:

Two or more contributors will have different due and payable dates for the same liability if the Commissioner gives them notice of their liability on different days.

Note 2:

This section does not affect the time at which the liability for the unpaid amount arose for, or became due and payable by, the defaulter.

220-800(5)  
If:


(a) the unpaid amount (the first interest amount ) is *general interest charge for a day in relation to another unpaid amount (the primary liability ) that consists of *franking deficit tax or *over-franking tax; and


(b) on a day the Commissioner gives a particular contributor written notice under subsection (4) of the contributor's liability for the first interest amount; and


(c) general interest charge arises:


(i) for a day (the later day ) after the days mentioned in paragraphs (a) and (b); and

(ii) in relation to the primary liability; and


(d) the general interest charge for the later day has not been paid or otherwise discharged in full by the time it became due and payable;

the Commissioner is taken to have given the contributor written notice under subsection (4) of the general interest charge for the later day on that later day.

220-800(6)  
Section 254 of the Income Tax Assessment Act 1936 applies in relation to the contributors ' liability as if it were a liability for tax.

Note:

Section 254 of the Income Tax Assessment Act 1936 deals with the payment of tax by agents and trustees.


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