INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
[ CCH Note: The heading to Subdiv BA, and s 160APVAA, were inserted immediately before Subdiv C, as specified by No 89 of 2000, s 3 and Sch 3 item 63.]
(a) on a particular day:
(i) a life assurance company pays a PAYG instalment in respect of a year of income; or
(ii) a PAYG instalment variation credit of a life assurance company is applied to reduce the company's liability for a PAYG instalment in respect of a year of income; and
(b) the company's company tax in respect of that year of income has not been assessed on or before that day;
there arises on that day, a class C franking credit of the company equal to the adjusted amount in relation to the provisional franking component of the amount paid or applied.
provisional franking component
of the amount paid or applied is so much of the amount paid or applied as is attributable to income that the company estimates will be shareholders' funds income for that year of income.
At the time the life assurance company's company tax is assessed, the actual allocation of income to the relevant funds will be known. At that point, the franking credit that arises under this section is reversed by a franking debit under section 160AQCNCB and replaced with a franking credit under section 160APVK .
Section 160AQCNCC imposes a penalty for overestimating the tax paid that is attributable to income that is likely to be allocated to shareholders' funds.