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 219-70   Tax offset under section 205-70  

219-70(1)  
For the purposes of paragraph 205-70(1)(c) , if a *life insurance company was entitled to a *tax offset under section 205-70 for a previous income year, assume section 63-10 applied to the part of the company ' s basic income tax liability for that previous income year that was attributable to its shareholders.

219-70(2)  
In working out the part of the company ' s basic income tax liability that was attributable to its shareholders, have regard to the company ' s accounting records.

Example:

The following apply to a life insurance company that satisfies the residency requirement for an income year:

  • (a) the company has a tax offset of $60,000 under section 205-70 (the franking deficit offset) for that year;
  • (b) the company ' s basic income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;
  • (c) 20% of the $100,000 is attributable to the company ' s shareholders (the shareholders ' part).
  • As a result of applying $20,000 of the franking deficit offset to reduce the shareholders ' part to nil, the company ' s basic income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.


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