Income Tax Assessment Act 1997



Division 197 - Tainted share capital accounts  

Subdivision 197-C - Consequence of transfer: tainting of share capital account  

SECTION 197-65   Choosing to untaint - further franking debits may arise  

When this section applies

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.


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

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.


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


applicable franking percentage

(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.


Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.