INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 7B - Tainted share capital accounts  

Subdivision C - Life assurance companies  

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

160ARDY(1)   [Liability to pay tax]  

If a company with higher tax shareholders elects to untaint its share capital account under section 160ARDW , 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)).

160ARDY(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%.

160ARDY(3)   [Calculation of notional franking amount]  

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

Graphic

where:

total class A franking debits
is the sum of:


(a) the amount of the class A franking debit (if any) that arose under section 160ARDV 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 A franking debits that arose under section 160ARDV when that further amount or those further amounts were transferred; and


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

total class C franking debits
is the sum of:


(a) the amount of the class C franking debit (if any) that arose under section 160ARDV 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 160ARDV 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 160ARDX(2) when the election was made.


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