Income Tax Assessment Act 1997
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).
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.
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).
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.