Income Tax Assessment Act 1997
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197-65(1)
This section applies if:
(a) a company chooses to untaint its *share capital account; and
(b) the applicable franking percentage (within the meaning of subsection (3)) is higher than the percentage that was the *benchmark franking percentage in relation to the *franking period in which the transfer of an amount (the transferred amount ) that is, or is part of, the *tainting amount occurred.
Note:
If paragraph (b) is satisfied in relation to 2 or more amounts, this section is to be applied separately in relation to each of those amounts (so a separate franking debit will arise in relation to each of those amounts).
Franking debit arises in relation to making the choice
197-65(2)
A *franking debit arises in the company ' s *franking account in relation to the transferred amount. The debit arises immediately before the end of the *franking period in which the choice to untaint is made.
197-65(3)
The amount of the *franking debit is the amount by which the amount calculated in accordance with the following formula exceeds the amount of the franking debit that arose under section 197-45 in relation to the transferred amount:
| 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 choice to untaint is made 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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