INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 5 - Franking of dividends  

Subdivision BA - Deficit deferral tax  

SECTION 160AQJA   CLASS A DEFICIT DEFERRAL TAX  

160AQJA(1)   Situation that gives rise to liability.  

If:


(a) during a franking year (the ``first franking year'' ) a life assurance company pays one or more instalments under section 221AZK for a year of income; and


(b) at a particular time during the next franking year (the ``second franking year'' ) the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ; and


(c) assuming that the refund, together with any previous refund of one or more instalments, for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class A franking deficit, or an increased class A franking deficit, at the end of the first franking year;

a class A deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.

160AQJA(2)   Class A deficit deferral amount.  

The ``class A deficit deferral amount'' is the amount of the class A franking deficit, or the amount of the increase in the class A franking deficit, referred to in paragraph (1)(c).

160AQJA(3)   Amount of class A deficit deferral tax.  

If a class A deficit deferral amount arises in relation to a company and a refund, the company is liable to pay class A deficit deferral tax in relation to the refund. The amount of the tax is the gross class A deficit deferral amount (see subsection (4)) reduced by any class A deficit deferral tax already payable by the company in relation to refunds received in the second franking year.

160AQJA(4)   Gross class A deficit deferral amount.  

The ``gross class A deficit deferral amount'' is worked out using the following formula:

Graphic

160AQJA(5)   Additional amounts taken to be part of instalment.  

If an amount is paid under subsection 221AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.


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