Income Tax Assessment Act 1997



Division 205 - Franking accounts, franking deficit tax liabilities and the related tax offset  

SECTION 205-5   Franking accounts, franking deficit tax liabilities and the related tax offset  

Each entity that is, or has ever been, a corporate tax entity has a franking account.

The payment of a PAYG instalment or income tax will generate a franking credit in that account. The amount of the credit is equal to the amount of tax paid. The receipt of a franked distribution by an entity from another corporate tax entity will also generate a franking credit. There are other circumstances in which a franking credit arises.

The receipt of a refund of income tax or the payment of a franked distribution by a corporate tax entity will generate a franking debit. There are, however, other cases where a franking debit arises. For example, a franking debit might arise under a determination by the Commissioner because distributions have been streamed.

An entity must be a franking entity at certain times and satisfy certain residency requirements before a franking credit or debit arises in its account.

Franking deficit tax is payable if the franking account of an entity is in deficit at the end of the entity ' s income year, or when the entity ceases to be a franking entity.


A tax offset is available to an entity that has incurred a liability to pay franking deficit tax.


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