INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 7B - Tainted share capital accounts  

Subdivision B - Companies other than life assurance companies  

SECTION 160ARDT   CONSEQUENCES OF ELECTION TO UNTAINT - UNTAINTING TAX FOR COMPANIES WITH HIGHER TAX SHAREHOLDERS  

160ARDT(1)   [Amount of tax where election made]  

If a company with higher tax shareholders elects to untaint its share capital account under section 160ARDR , the company is liable to pay tax equal to the difference between:


(a) the tax payable by top marginal rate shareholders (see subsection (2)); and


(b) the notional franking amount (see subsection (3)).

160ARDT(2)   [Calculation of tax]  

In subsection (1), the tax payable by top marginal rate shareholders is the amount calculated in accordance with the formula:

Graphic

where:

top marginal rate
is the maximum rate specified in column 2 of the table in Part I of Schedule 7 to the Income Tax Rates Act 1986 that applies for the year of income in which the election is made.

top medicare levy rate
is 2.5%.

160ARDT(3)   [Notional franking amount]  

In subsections (1) and (2), the notional franking amount is the amount calculated in accordance with the formula:

Graphic

where:

total franking debits
is the sum of:


(a) the amount of the class C franking debit (if any) that arose under section 160ARDQ when the share capital account most recently became tainted; and


(b) if the company subsequently transferred one or more further amounts to its share capital account from any of its other accounts - the amounts of any class C franking debits that arose under section 160ARDQ when that further amount or those further amounts were transferred; and


(c) the amount of the class C franking debit (if any) specified in the election, that arose under subsection 160ARDS(2) when the election was made.


View surrounding sectionsView surrounding sectionsBack to top


This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.