INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-B - Consequence of transfer: franking debit arises  

SECTION 197-45   A franking debit arises in relation to the transfer  

197-45(1)  
A *franking debit arises in a company ' s *franking account if an amount (the transferred amount ) to which this Division applies is transferred to the company ' s *share capital account. The debit arises immediately before the end of the *franking period in which the transfer of the amount occurs.

197-45(2)  


The amount of the *franking debit is calculated in accordance with the formula:


Transferred amount × Applicable franking percentage
Applicable gross-up rate

where:

applicable franking percentage
means:


(a) if, before the debit arises, the *benchmark franking percentage for the *franking period in which the transfer of the amount occurs has already been set by section 203-30 - that percentage; or


(b) otherwise - 100%.

applicable gross-up rate
means the company ' s *corporate tax gross-up rate for the income year in which the franking debit arises.



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