Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-6 - THE IMPUTATION SYSTEM

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Division 219 - Imputation for life insurance companies

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Subdivision 219-B - Franking accounts of life insurance companies

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SECTION 219-70 Tax offset under section 205-70

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219-70(1)
For the purposes of paragraph 205-70(1)(c) , if a *life insurance company was entitled to a *tax offset under section 205-70 for a previous income year, assume section 63-10 applied to the part of the company ' s basic income tax liability for that previous income year that was attributable to its shareholders.

219-70(2)
In working out the part of the company ' s basic income tax liability that was attributable to its shareholders, have regard to the company ' s accounting records.

Example:

The following apply to a life insurance company that satisfies the residency requirement for an income year:

(a) the company has a tax offset of $60,000 under section 205-70 (the franking deficit offset) for that year;

(b) the company ' s basic income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;

(c) 20% of the $100,000 is attributable to the company ' s shareholders (the shareholders ' part).

As a result of applying $20,000 of the franking deficit offset to reduce the shareholders ' part to nil, the company ' s basic income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.

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History

S 219-70 substituted by No 110 of 2014, s 3 and Sch 5 item 108, applicable in relation to the 2006-07 income year and later income years. S 219-70 formerly read:

SECTION 219-70 Tax offset under section 205-70
219-70(1)
In applying section 205-70 to a *life insurance company, that section has effect as if:

(a) the reference in paragraph 205-70(1)(c) to the amount that would have been an entity ' s income tax liability for a previous income year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders; and

(b) the reference in subsection 205-70(3) to the amount that would have been an entity ' s income tax liability for the relevant year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders.

219-70(2)
In working out the part of an amount that is attributable to the company ' s shareholders for the purposes of this section, regard is to be had to the accounting records of the company.
Example:

The following apply to a life insurance company that satisfies the residency requirement for an income year:

• the company has a tax offset of $60,000 under section 205-70 (the franking deficit offset ) for that year;

• the company ' s income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;

• 20% of the $100,000 is attributable to the company ' s shareholders (the shareholders ' part ).

As a result of applying $20,000 of the franking deficit offset to reduce the shareholders ' part to nil, the company ' s income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.

S 219-70 inserted by No 107 of 2003.

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