INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 5 - Franking of dividends  

Subdivision B - Franking deficit tax  

SECTION 160AQJ   LIABILITY TO FRANKING DEFICIT TAX  

160AQJ(1)   [Company has class A franking deficit]  

Where a company has a class A franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount calculated in accordance with the formula:

Graphic

where:

CR is the applicable general company tax rate; and

FD is the amount of the class A franking deficit.

160AQJ(1A)   [Company has class B franking deficit]  

If a company has a class B franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount worked out using the formula:

Graphic

where:

`` Franking deficit '' means the amount of the class B franking deficit;

`` Company tax rate '' means the applicable general company tax rate.

160AQJ(1B)   [Company has class C franking deficit]  

If a company has a class C franking deficit at the end of a franking year, the company is liable to pay tax equal to the amount worked out using the formula:

Graphic

where:

Franking deficit means the amount of the class C franking deficit.

Company tax rate means the applicable general company tax rate.

160AQJ(1C)   [Venture capital deficit tax]  

The amount of tax that a PDF would otherwise be liable to pay under subsection (1B) in relation to a franking year is reduced by the amount (if any) of the venture capital deficit tax the PDF is liable to pay in relation to that franking year under section 160ASEN .

160AQJ(2)   [Relief from liability]  

Where a company that has, in respect of a year of income:


(a) given a notice under paragraph 221AQ(1)(a) ; and


(b) made an initial payment of tax under section 221AP ;

would, but for this subsection, be liable to pay tax under subsection (1) or (1A), or both, of this section in respect of the franking year in which the last day of that year of income occurs (in this subsection called the ``relevant franking deficit tax'' ):


(c) if the company is not a life assurance company and the amount of the relevant franking deficit tax does not exceed the amount of the initial payment of tax - the company is not liable to pay tax under subsection (1) or (1A), as the case may be, in respect of that franking year; or


(d) if the company is not a life assurance company and the amount of the relevant franking deficit tax exceeds the amount of the initial payment of tax - the tax that the company is liable to pay under subsection (1) or (1A), as the case may be, in respect of that franking year is an amount worked out using the formula:


Excess   ×   Particular franking
                          deficit tax                          
Relevant franking deficit
          tax


where:
  • ``Excess'' means the amount of the excess;
  • ``Particular franking deficit tax'' means the tax that the company is liable to pay under subsection (1) or (1A), as the case requires; or

  • (e) if the company is a life assurance company and the amount of the relevant franking deficit tax does not exceed the amount calculated using the formula:


    Inital payment   -   Fund component


    where:
  • ``Initial payment'' means the amount of the initial payment of tax;
  • ``Fund component'' means so much of the initial payment of tax as is attributable to so much of the estimated tax as relates to the following components of taxable income:
  • (i) the CS/RA component;
  • (ii) the AD/RLA component;
  • (iii) the NCS component;

  • the company is not liable to pay tax under subsection (1) or (1A), as the case may be, in respect of that franking year; or


    (f) if the company is a life assurance company and the amount of the relevant franking deficit tax exceeds the amount calculated using the formula:


    Initial payment   -   Fund component


    where:
  • ``Initial payment'' means the amount of the initial payment of tax;
  • ``Fund component'' means so much of the initial payment of tax as is attributable to so much of the estimated tax as relates to the following components of taxable income:
  • (i) the CS/IRA component;
  • (ii) the AD/RLA component;
  • (iii) the NCS component;

  • the tax that the company is liable to pay under subsection (1) or (1A), as the case may be, in respect of that franking year is an amount worked out using the formula:


    Excess   ×   Particular franking
                              deficit tax                          
    Relevant franking deficit
              tax


    where:
  • ``Excess'' means the amount of the excess;
  • ``Particular franking deficit tax'' means the tax that the company is liable to pay under subsection (1) or (1A), as the case requires.

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