Income Tax Assessment Act 1997
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Hide history noteSECTION 208-145 208-145 Franking debits arising because of status as exempting entity or former exempting entity
The following table sets out when a debit arises in the *franking account of an entity because of its status as an *exempting entity or *former exempting entity.
| Franking debits arising because of status as an exempting entity or former exempting entity | |||
| Item | If: | A debit of: | Arises: |
| 1 | an entity becomes a *former exempting entity; and
the entity has a *franking surplus at the time it becomes a former exempting entity |
the amount of the franking surplus | immediately after the entity becomes a former exempting entity |
| 2 | the *exempting account of a *former exempting entity would, apart from item 7 of the table in section 208-115, be in *deficit immediately before the end of an income year | an amount equal to the deficit | immediately before the end of the income year |
| 3 | an *exempting credit arises in the *exempting account of the entity under item 5, 6 or 9 of the table in section 208-115 | an amount equal to the exempting credit | when the exempting credit arises |
| 4 | a *former exempting entity becomes an *exempting entity; and
the entity has an *exempting deficit at the time it becomes an *exempting entity |
an amount equal to the exempting deficit | immediately after it becomes an exempting entity |
| 5 | a *franking credit arises in the *franking account of an entity under item 3 or 4 of the table in section 205-15 because a *distribution is made by an *exempting entity to the entity, or a distribution made by an exempting entity *flows indirectly to the entity | an amount equal to the amount of the franking credit | when the franking credit arises |
Note 1:
Item 3 of the table is designed to reverse out franking credits that arise in relation to a period during which the entity is an exempting entity. The entity will receive an exempting credit instead.
Note 2:
Item 5 of the table is designed to reverse out franking credits that arise under the core rules because an entity receives a franked distribution from an exempting entity. Only a recipient who is itself an exempting entity is entitled to a franking credit in these circumstances.
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