Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-6 - THE IMPUTATION SYSTEM  

Division 219 - Imputation for life insurance companies  

Subdivision 219-B - Franking accounts of life insurance companies  

SECTION 219-55   Adjustment resulting from an amended assessment  

219-55(1)    
This section applies in relation to the * franking account of a * life insurance company if:

(a) the assessment of the company ' s * income tax liability for an income year is amended on a particular day (the adjustment day ); and

(b) the * shareholders ' ratio (the new ratio ) based on the amended assessment is different from the shareholders ' ratio used previously in relation to that income year to work out a * franking credit or * franking debit for the company; and

(c) the franking account would have a different balance on the adjustment day if the new ratio had been used to work out all the franking credits and franking debits covered by paragraph (b).

Note:

The operation of this section is affected by section 219-75 if a tax offset under section 205-70 is, or has been, applied to work out the company ' s income tax liability.

219-55(2)    
On the adjustment day, a * franking credit or * franking debit (as appropriate) of the amount worked out under subsection (3) arises in the * franking account.

219-55(3)    
The amount is an adjustment that will bring the * franking account to the balance that it would have on the adjustment day if the new ratio had been used to work out all the * franking credits and * franking debits covered by paragraph (1)(b).

Example:

On the basis of a shareholders ' ratio of 60 % for the income year, franking credits of the amounts of $ 6,000, $ 6,000, $ 6,000 and $ 6,000 arose under item 2 of the table in section 219-15 for Company X.

An amended assessment results in a new shareholders ' ratio of 70 % . Under this section, a franking credit of $ 4,000 arises on the day of the amended assessment to bring the balance of the franking account from $ 24,000 to $ 28,000, which would be the account ' s balance if the new shareholders ' ratio had been used.