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 219-15   Franking credits  

219-15(1)  
The table in section 205-15 does not apply to a *life insurance company.

219-15(2)  


The following table sets out when a *franking credit arises under this section in the *franking account of a *life insurance company.


Franking credits in the franking account
Item If: A credit of: Arises:
1 the company *pays a PAYG instalment; and

the company satisfies the *residency requirement for the income year in relation to which the PAYG instalment is paid; and

the payment is made before the company ' s *assessment day for that income year; and

the company is a *franking entity for the whole or part of the relevant *PAYG instalment period
that part of the payment that:

(a) the company estimates will be attributable to the *shareholders ' share of the income tax liability of the company for that income year; and

(b) is attributable to the period during which the company was a franking entity
on the day on which the payment is made (see note 1 to this subsection)
2 the company *paid a PAYG instalment; and

the company satisfied the *residency requirement for the income year in relation to which the PAYG instalment was paid; and

the payment was made before the company ' s *assessment day for that income year; and

the company was a *franking entity for the whole or part of the relevant *PAYG instalment period
that part of the payment that is attributable to:

(a) the *shareholders ' share of the income tax liability of the company for that income year; and

(b) the period during which the company was a franking entity
on the company ' s assessment day for that income year (see note 1 to this subsection)
3 the company *pays a PAYG instalment; and

the company satisfies the *residency requirement for the income year in relation to which the PAYG instalment is paid; and

the payment is made on or after the company ' s *assessment day for that income year; and

the company is a *franking entity for the whole or part of the relevant *PAYG instalment period
that part of the payment that is attributable to:

(a) the *shareholders ' share of the income tax liability of the company for that income year; and

(b) the period during which the company was a franking entity
on the day on which the payment is made
4 the company *pays income tax; and

the company satisfies the *residency requirement for the income year for which the tax is paid; and

the company is a *franking entity for the whole or part of that income year
that part of the payment that is attributable to:

(a) the *shareholders ' share of the income tax liability of the company for that income year; and

(b) the period during which the company was a franking entity
on the day on which the payment is made
5 a *franked distribution is made to the company; and

the company satisfies the *residency requirement for the income year in which the distribution is made; and
the amount of the tax offset on the day on which the distribution is made
the company is a *franking entity when it receives the distribution; and
the company is entitled to a *tax offset under Division 207 because of the distribution; and
the tax offset is not subject to the refundable tax offset rules (see Division 67)
6 a *franked distribution *flows indirectly to the company through a partnership or the trustee of a trust; and the amount of the tax offset at the time specified in subsection (3)
the company is a *franking entity when the franked distribution is made; and
the company is entitled to a *tax offset under Division 207 because of the distribution; and
the tax offset is not subject to the refundable tax offset rules (see Division 67)
7 the company incurs a liability to pay *franking deficit tax under section 205-45 or 205-50 the amount of the liability immediately after the liability is incurred
8 a *franking credit arises under subsection 418-55(1) in relation to an *exploration credit the amount of the *franking credit specified in subsection 418-55(2) at the time provided by subsection 418-55(3)
9 the company *pays diverted profits tax; and
the company satisfies the *residency requirement for the income year for which the tax is paid; and
the company is a *franking entity for the whole or part of that income year
that part of the payment that is attributable to:
(a) the *shareholders ' share of the income tax liability of the company for that income year; and
(b) the period during which the company was a franking entity;
multiplied by the proportion worked out under subsection (4)
on the day on which the payment is made

Note 1:

On the assessment day, a franking credit that arose under item 1 of the table:

  • · is reversed by a franking debit that arises under item 1 of the table in section 219-30 ; and
  • · is replaced with a franking credit that arises under item 2 of the table in this section.
  • Note 2:

    Section 219-50 tells you how to work out the part of an amount that is attributable to the shareholders ' share of the income tax liability of the company for the income year.

    Note 3:

    To find out whether a tax offset under Division 207 is subject to the refundable tax offset rules: see section 67-25 .

    219-15(3)  
    A *franking credit covered by item 6 of the table arises at the end of the income year:


    (a) that is an income year of the last partnership or trust interposed between:


    (i) the *life insurance company; and

    (ii) the *corporate tax entity that made the distribution; and


    (b) during which the *franked distribution *flows indirectly to the life insurance company.

    219-15(4)  


    The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.

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