Income Tax Assessment Act 1997
Pt 3-6 inserted by No 48 of 2002.
Div 203 inserted by No 48 of 2002.
If an entity makes a *frankable distribution in breach of the *benchmark rule:
(a) the entity is liable to pay over-franking tax imposed by the New Business Tax System (Over-franking Tax) Act 2002 if the *franking percentage for the *distribution exceeds the entity ' s *benchmark franking percentage for the *franking period in which the distribution is made; and
(b) a *franking debit arises in the entity ' s *franking account if the franking percentage for the distribution is less than the entity ' s benchmark franking percentage for the franking period in which the distribution is made. 203-50(2)
Use the following formula to work out:
(a) in a case dealt with under paragraph (1)(a) - the amount of the *over-franking tax; and
(b) in a case dealt with under paragraph (1)(b) - the amount of the *franking debit:
|Amount of the *frankable distribution||×||Franking % differential|
|Applicable gross-up rate|
Definition of " applicable gross-up rate " inserted by No 41 of 2017, s 3 and Sch 4 item 14, applicable to the 2016-17 income year and later income years.
(a) the *franking percentage for the *frankable distribution; and
(i) if subparagraph (ii) does not apply - the entity ' s *benchmark franking percentage for the *franking period in which the *distribution is made; or
(ii) if the Commissioner in the exercise of the Commissioner ' s powers under subsection 203-55(1) , permits the entity to frank the distribution at a different franking percentage - that percentage.
An entity makes 3 successive frankable distributions in a franking period. Each of those distributions is represented in the following diagram. The franking percentage for the first distribution is 40%, and so the entity ' s benchmark franking percentage for the period is 40%.
Distribution 2 is under-franked to the extent of the franking % differential. This is used to work out the amount of the under-franking debit under subsection (2).
Distribution 3 is over-franked to the extent of the franking % differential. This is used to work out the amount of over-franking tax on the distribution under the New Business Tax System (Over-franking Tax) Act 2002 . The amount of the tax is calculated using the same formula as that set out in subsection (2).
S 203-50(2) amended by No 41 of 2017, s 3 and Sch 4 item 13, by substituting the formula, applicable to the 2016-17 income year and later income years. The formula formerly read:
|" Amount of the *frankable distribution||×||Franking % differential|
|*Corporate tax gross-up rate "|
S 203-50(2) amended by No 66 of 2015, s 3 and Sch 1 item 20, by substituting the formula, applicable to assessments for years of income starting on or after 1 July 2015. The formula formerly read:
× Amount of the*frankable distribution × *Corporate tax rate 100% - *Corporate tax rate
A *franking debit arising under paragraph (1)(b) is in addition to any franking debit that would otherwise arise for the entity because of the *distribution. 203-50(4)
The *franking debit arises on the day on which the *frankable distribution is made.
S 203-50 inserted by No 48 of 2002.
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.