Private ruling: Commissioner's discretion - franking deficit tax
Date of advice: 28 November 2022
Published: 30 January 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise discretion under subsection 205-70(6) of the Income Tax Assessment Act 1997 (ITAA 1997) not to apply the Franking Deficit Tax (FDT) offset penalty? | A1: Yes. We accept that the events and circumstances that lead to the franking deficit were outside your control and not readily foreseeable. The events are not due to matters you could influence and are not due to improper tax planning, bad management, inadvertent errors, or expansion of business. Accordingly, the Commissioner will exercise his discretion under subsection 205-70(6) not to apply the FDT offset in the year ending 30 June 20XX.

Relevant facts and circumstances: Your agent advised that there was a credit balance in the company franking account. The company then declared a dividend. The deficit arose due to the timing of an event which was outside the company's control. A FDT liability arose in the 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 205-70(6)