Income Tax Assessment Act 1997

s 210-150 — Deferring venture capital deficit

(1) The object of this section is to ensure that an entity does not avoid * venture capital deficit tax by deferring the time at which a * venture capital debit occurs. (2) An entity is taken to have * received a refund of income tax for an income year immediately before the end of that year for the purposes of subsection 210 ‑ 135(2) if: (a) the refund is paid within 3 months after the end of that year; and (b) the entity’s * venture capital sub ‑ account would have been in * deficit, or in deficit to a greater extent, at the end of the previous income year if the refund had been received in the previous income year. (3) If an entity ceases to be a * PDF during an income year, it is taken to have * received a refund of income tax immediately before it ceased to be a PDF for the purposes of subsection 210 ‑ 135(3) if: (a) the refund is attributable to a period in the year during which the entity was a PDF; and (b) the refund is paid within 3 months after the entity ceases to be a PDF; and (c) the * venture capital sub ‑ account of the entity would have been in * deficit, or in deficit to a greater extent, immediately before it ceased to be a PDF if the refund had been received before it ceased to be a PDF.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 210-155 — What this Subdivision is about

A superannuation fund or other entity that deals with superannuation that receives a distribution franked with a venture capital credit is entitled to a tax offset equal to the credit. Table of sections 210 ‑ 160 The significance of a venture capital credit 210 ‑ 165 Recipients for whom the venture capital credit is not significant Operative provisions 210 ‑ 170 Tax offset for certain recipients of distributions franked with venture capital credits 210 ‑ 175 Amount of the tax offset 210 ‑ 180 Application of Division 207 where the recipient is entitled to a tax offset under section 210 ‑ 170

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 210-160 — The significance of a venture capital credit

(1) The venture capital credit on a distribution is only significant in the hands of a relevant venture capital investor (basically a superannuation fund or other entity that deals with superannuation). (2) That investor receives a tax offset. In most cases, this will be equal to the venture capital credit. (3) Under section 124ZM of the Income Tax Assessment Act 1936 , that part of the distribution that is franked with a venture capital credit is also treated as exempt income in the hands of the entity.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 210-165 — Recipients for whom the venture capital credit is not significant

(1) For other entities, the fact that all or part of the franking credit on a distribution is also a venture capital credit can be ignored. (2) The franking credit will either generate a gross ‑ up of the entity’s assessable income and a corresponding tax offset under Division 207 or, if the right to make an election under section 124ZM of the Income Tax Assessment 1936 is exercised, the franked part of the distribution will be treated as exempt income. (3) The unfranked part of the distribution is treated as exempt income under section 124ZM of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 210-170 — Tax offset for certain recipients of distributions franked with venture capital credits

(1) The recipient of a * distribution * franked with a venture capital credit is entitled to a * tax offset for the income year in which the distribution is made if: (a) the recipient is a relevant venture capital investor; and (b) the recipient is not: (i) a partnership; or (ii) a trustee (other than the trustee of a * complying superannuation entity, a * non ‑ complying superannuation fund or a * non ‑ complying approved deposit fund); and (c) the recipient satisfies the * residency requirement for an entity receiving a distribution; and (d) the distribution is not * exempt income of the recipient (ignoring section 124ZM of the Income Tax Assessment Act 1936 ); and (e) the recipient is a qualified person in relation to the distribution for the purposes of Division 1A of former Part IIIAA of the Income Tax Assessment Act 1936 ; and (f) the distribution is not part of a * dividend stripping operation; and (g) the Commissioner has not made a determination under paragraph 204 ‑ 30(3)(c) that no * imputation benefit is to arise for the receiving entity in respect of the distribution; and (h) the Commissioner has not made a determination under paragraph 177EA(5)(b) that no imputation benefit is to arise in respect of the distribution to the recipient. Relevant venture capital investors (2) The following entities are relevant venture capital investors : (a) the trustee of an entity that is a * complying superannuation entity in relation to the income year in which the * distribution is made and is not a * self managed superannuation fund; (d) a * life insurance company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 64 of 2020, effective Sch 3 (items 72–122): 1 July 2020 (s 2(1) item 5) Sch 3 (items 228–239, 325, 326): 1 Oct 2020 (s 2(1) item 6) Sch 3 (items 327–330): 1 July 2017 (s 2(1) item 7)

s 210-175 — Amount of the tax offset

Where the recipient is not a life insurance company (1) If the entity receiving the * distribution is not a * life insurance company, the * tax offset is equal to the * venture capital credit on the distribution. Where the recipient is a life insurance company (2) If the entity receiving the * distribution is a * life insurance company, the * tax offset is worked out using the formula: where: complying superannuation class of taxable income means the * complying superannuation class of taxable income of the company for the income year in which the * distribution is made. tax offset to which the entity would otherwise be entitled is the * tax offset that the company would be entitled to under subsection (1) if the entity were not a life insurance company. total income is the company’s assessable income for the income year.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 8 of 2010, effective Sch 1 (item 33) and Sch 5 (item 137(a)): 1 Mar 2010 (s 2(1) items 4, 38) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 210-180 — Application of Division 207 where the recipient is entitled to a tax offset under section 210 ‑ 170

If the recipient of a * distribution * franked with a venture capital credit is entitled to a * tax offset under section 210 ‑ 170, Division 207 does not apply to that * part of the distribution that is venture capital franked.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-1 — Purpose of the system

These provisions: (a) allow the Commissioner to gather sufficient information to determine whether tax is payable by a corporate tax entity under the imputation system; and (b) provide for the Commissioner to assess the amount of tax that is payable; and (c) specify when the tax is payable; and (d) establish systems to support the assessment and collection of the tax.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-5 — Key features

(1) Initial information about a corporate tax entity’s franking activities is provided by means of a return, called a franking return, given by the entity to the Commissioner. (2) The Commissioner is able to make a legislative instrument requiring corporate tax entities to give a franking return for an income year. (3) The Commissioner is also able to require a particular corporate tax entity to give a franking return for one or more income years. The Commissioner might do this, for example, if the Commissioner wishes to audit the corporate tax entity’s franking activities over a number of years. (4) The Commissioner may assess whether tax is payable under the imputation system and the amount of that tax. (5) In most cases, this is done by treating the first franking return of a corporate tax entity for an income year as an assessment by the Commissioner. To this extent, there is self ‑ assessment. (6) An assessment by the Commissioner is conclusive evidence of a corporate tax entity’s tax liabilities under the imputation system, except for the purposes of objection, review and appeal processes under Part IVC of the Taxation Administration Act 1953 (see section 350 ‑ 10 in Schedule 1 to the Taxation Administration Act 1953 ). (7) Assessments can be amended by the Commissioner within certain time limits.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 2 of 2015, effective Sch 2 (items 1, 73, 111) and Sch 4 (items 1–8, 79): 25 Feb 2015 (s 2(1) items 3, 5, 6) Sch 2 (items 29–33): 1 July 2015 (s 2(1) item 4) | Amended by No 64 of 2020, effective Sch 3 (items 72–122): 1 July 2020 (s 2(1) item 5) Sch 3 (items 228–239, 325, 326): 1 Oct 2020 (s 2(1) item 6) Sch 3 (items 327–330): 1 July 2017 (s 2(1) item 7)

s 214-10 — What this Subdivision is about

A franking return for an income year provides the Commissioner with information about a corporate tax entity’s franking activities during that year. Table of sections Operative provisions 214 ‑ 15 Requirement to give franking return—general 214 ‑ 20 Notice to a specific corporate tax entity 214 ‑ 25 Content and form of a franking return 214 ‑ 30 Franking account balance 214 ‑ 35 Venture capital sub ‑ account balance 214 ‑ 40 Meaning of franking tax 214 ‑ 45 Effect of a refund on franking returns

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-15 — Requirement to give franking return—general

(1) The Commissioner may, by legislative instrument, require each * corporate tax entity to which the instrument applies to give the Commissioner a * franking return for a specified income year. (2) An entity to which the instrument applies must comply with the requirement within the time specified in the instrument. Note: The Commissioner may defer the time for giving the return: see section 388 ‑ 55 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Repealed and substituted by No 64 of 2020, effective Sch 3 (items 72–122): 1 July 2020 (s 2(1) item 5) Sch 3 (items 228–239, 325, 326): 1 Oct 2020 (s 2(1) item 6) Sch 3 (items 327–330): 1 July 2017 (s 2(1) item 7)

s 214-20 — Notice to a specific corporate tax entity

(1) The Commissioner may give a * corporate tax entity a written notice requiring the entity to give the Commissioner a * franking return for an income year specified in the notice. (2) The entity must comply with the requirement within the time specified in the notice, or within any further time allowed by the Commissioner. (3) The entity must comply with the requirement regardless of whether the entity has given, or has been required to give, the Commissioner a * franking return.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 214-25 — Content and form of a franking return

(1) A * corporate tax entity must include the following information in its * franking return for an income year: (a) if the entity is a * franking entity at the end of the income year—its * franking account balance at the end of the income year; and (b) if the entity ceased to be a franking entity during the income year—its franking account balance immediately before it ceased to be a franking entity; and (c) if the entity is a * PDF at the end of the income year—its * venture capital sub ‑ account balance at the end of the income year; and (d) if the entity ceased to be a PDF during the income year—its venture capital sub ‑ account balance immediately before it ceased to be a PDF; and (e) the amounts (if any) of * franking tax which the entity is liable to pay because of events that have occurred, or are taken to have occurred, during the income year; and (f) any other information required by the Commissioner for the purposes of administering this Part. (2) The return must be in the * approved form.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 214-30 — Franking account balance

A * corporate tax entity’s franking account balance at a particular time is: (a) if the entity has a * franking surplus or a * franking deficit at that time—the amount of the surplus or deficit; or (b) if the entity does not have a franking surplus or a franking deficit at that time—nil.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-35 — Venture capital sub ‑ account balance

A * PDF’s venture capital sub ‑ account balance at a particular time is: (a) if the PDF has a * venture capital surplus or a * venture capital deficit at that time—the amount of the surplus or deficit; or (b) if the entity does not have a venture capital surplus or a venture capital deficit at that time—nil.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-40 — Meaning of franking tax

Each of the following is a franking tax : (a) * franking deficit tax; (b) * over ‑ franking tax; (c) * venture capital deficit tax.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-45 — Effect of a refund on franking returns

If no franking return is outstanding (1) If: (a) a * corporate tax entity * receives a refund of income tax or * receives a refund of diverted profits tax; and (b) the receipt of the refund gives rise to a liability, or an increased liability, to pay * franking deficit tax because of the operation of subsection 205 ‑ 50(2) or (3); and (c) when the refund is received, the entity does not have a * franking return that is * outstanding for the income year in which the liability arose; the entity must give the Commissioner a franking return for the income year within 14 days after the refund is received. Refund received within 14 days before an outstanding franking return is due (2) If: (a) an entity * receives a refund of income tax or * receives a refund of diverted profits tax; and (b) the receipt of the refund gives rise to a liability, or an increased liability, to pay * franking deficit tax because of the operation of subsection 205 ‑ 50(2) or (3); and (c) when the refund is received, the entity has a * franking return that is * outstanding for the income year in which the liability arose; and (d) the entity receives the refund within the period of 14 days ending on the day by which the outstanding return must be given to the Commissioner; the entity may, instead of accounting for the liability, or increased liability, in the outstanding return, account for it in a further return given to the Commissioner within 14 days after the refund is received. Meaning of outstanding (3) A * franking return for an income year is outstanding at a particular time if each of the following is true at that time: (a) the * corporate tax entity has been required to give a * franking return for the income year; (b) the time within which the franking return must be given has not yet passed; (c) the franking return has not yet been given.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 27 of 2017, effective Sch 1 (items 14–43, 52) and Sch 3: 1 July 2017 (s 2(1) items 4, 5)

s 214-55 — What this Subdivision is about

The Commissioner may make an assessment of a corporate tax entity’s liability to pay franking tax, and the franking account balance and the venture capital sub ‑ account balance on which that liability is based. An entity’s first franking return for an income year is treated as an assessment by the Commissioner. To this extent, there is self ‑ assessment. Table of sections Operative provisions 214 ‑ 60 Commissioner may make a franking assessment 214 ‑ 65 Commissioner taken to have made a franking assessment on first return 214 ‑ 70 Part ‑ year assessment 214 ‑ 75 Validity of assessment 214 ‑ 80 Objections

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 214-60 — Commissioner may make a franking assessment

(1) The Commissioner may make an assessment of: (a) if a * corporate tax entity is a * franking entity at the end of the income year—its * franking account balance at the end of the income year; and (b) if a corporate tax entity ceased to be a franking entity during the income year—its franking account balance immediately before it ceased to be a franking entity; and (c) if a corporate tax entity is a * PDF at the end of the income year—its * venture capital sub ‑ account balance at the end of the income year; and (d) if a corporate tax entity ceased to be a PDF during the income year—its venture capital sub ‑ account balance immediately before it ceased to be a PDF; and (e) the amounts (if any) of * franking tax which the entity is liable to pay because of events that have occurred, or are taken to have occurred, during the income year. This is a franking assessment for the entity for the income year. (1A) However, the Commissioner must not make an assessment under subsection (1) for an entity for an income year if: (a) the entity is not required under Subdivision 214 ‑ A to give the Commissioner a * franking return for the income year; and (b) the entity is not required under Division 214 of the Income Tax (Transitional Provisions) Act 1997 to give the Commissioner a franking return for the balancing period ending within the income year; and (c) the entity was required to lodge an * income tax return for the income year by a particular time; and (d) the entity has lodged that income tax return; and (e) 3 years have passed since the later of the following: (i) the time mentioned in paragraph (c); (ii) the time when the entity lodged that income tax return. (2) The Commissioner must give the entity notice of the assessment as soon as practicable after making the assessment.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 79 of 2007, effective Schedule 1 (items 28, 29, 39–42, 43(1), (6)), Schedules 3, 4, Schedule 6 (items 3–8), Schedule 9 (items 14–26, 30, 34) and Schedule 10 (items 10–13, 32): Royal Assent Schedule 8 (items 2, 12–25, 26(1)–(3)): 1 July 2007 | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 214-65 — Commissioner taken to have made a franking assessment on first return

(1) If: (a) a * corporate tax entity gives the Commissioner a * franking return for an income year on a particular day (the return day ); and (b) the return is the first franking return given by the entity for the year; and (c) the Commissioner has not already made a * franking assessment for the entity for the year; the Commissioner is taken to have made a franking assessment for the entity for the year on the return day, and to have assessed: (d) the entity’s * franking account balance at a particular time as that stated in the return as the balance at that time; and (e) the entity’s * venture capital sub ‑ account balance (if any) at a particular time as that stated in the return as the balance at that time; and (f) the amounts (if any) of * franking tax payable by the entity because of events that have occurred, or are taken to have occurred, during that income year as those stated in the return. (2) The return is taken to be notice of the assessment signed by the Commissioner and given to the entity on the return day.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-70 — Part ‑ year assessment

(1) The Commissioner may, at any time during an income year, make a * franking assessment for a * corporate tax entity for a particular period within that year as if the beginning and end of that period were the beginning and end of an income year. (2) This Part applies, for the purposes of that assessment, as if the beginning and end of the period were the beginning and end of an income year.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-75 — Validity of assessment

The validity of a * franking assessment is not affected because any of the provisions of this Act have not been complied with.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-80 — Objections

If a * corporate tax entity is dissatisfied with a * franking assessment made in relation to the entity, the entity may object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-90 — What this Subdivision is about

The Commissioner may amend franking assessments within certain time limits. Table of sections Operative provisions 214 ‑ 95 Amendments within 3 years of the original assessment 214 ‑ 100 Amended assessments are treated as franking assessments 214 ‑ 105 Further return as a result of a refund affecting a franking deficit tax liability 214 ‑ 110 Later amendments—on request 214 ‑ 115 Later amendments—failure to make proper disclosure 214 ‑ 120 Later amendments—fraud or evasion 214 ‑ 125 Further amendment of an amended particular 214 ‑ 135 Amendment on review etc. 214 ‑ 140 Notice of amendments

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-95 — Amendments within 3 years of the original assessment

(1) The Commissioner may amend a * franking assessment for a * corporate tax entity for an income year at any time during the period of 3 years after the * original franking assessment day for the entity for that year. (2) The original franking assessment day for a * corporate tax entity for an income year is the day on which the first * franking assessment for the entity for the income year is made.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-100 — Amended assessments are treated as franking assessments

Once an amended * franking assessment for a corporate tax entity for an income year is made, it is taken to be a franking assessment for the entity for the year.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-105 — Further return as a result of a refund affecting a franking deficit tax liability

(1) If: (a) a * franking assessment for a * corporate tax entity for an income year has been made; and (b) on a particular day (the further return day ) the entity gives the Commissioner a further * franking return for the income year under subsection 214 ‑ 45(1) (because the entity has * received a refund of income tax that affects its liability to pay * franking deficit tax); the Commissioner is taken to have amended the entity’s franking assessment on the further return day, and to have assessed: (c) the entity’s * franking account balance at a particular time as that stated in the further return as the balance at that time; and (d) the entity’s * venture capital sub ‑ account balance (if any) at a particular time as that stated in the further return as the balance at that time; and (e) the amounts (if any) of * franking tax payable by the entity because of events that have occurred, or are taken to have occurred, during that income year as those stated in the further return. (2) The further return is taken to be notice of the amended assessment signed by the Commissioner and given to the entity on the further return day.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 214-110 — Later amendments—on request

The Commissioner may amend a * franking assessment for a * corporate tax entity for an income year after the end of the period of 3 years after the * original franking assessment day for the entity for the year if, within that 3 year period: (a) the entity applies for the amendment; and (b) the entity gives the Commissioner all the information necessary for making the amendment.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-115 — Later amendments—failure to make proper disclosure

(1) If: (a) a * corporate tax entity does not make a full and true disclosure to the Commissioner of the information necessary for a * franking assessment for the entity for an income year; and (b) in making the assessment, the Commissioner makes an * under ‑ assessment; and (c) the Commissioner is not of the opinion that the under ‑ assessment is due to fraud or evasion; the Commissioner may amend the assessment at any time during the period of 6 years after the * original franking assessment day for the entity for the year. (2) The Commissioner makes an under ‑ assessment in a * franking assessment (the earlier assessment ) if, in amending the earlier assessment, the Commissioner would have to do one or more of the following for the amended assessment to be correct: (a) reduce the * franking surplus (including to a nil balance); (b) increase the * franking deficit (including from a nil balance); (c) increase * franking tax payable.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-120 — Later amendments—fraud or evasion

If: (a) a * corporate tax entity does not make a full and true disclosure to the Commissioner of the information necessary for a * franking assessment for the entity for an income year; and (b) in making the assessment, the Commissioner makes an * under ‑ assessment; and (c) the Commissioner is of the opinion that the under ‑ assessment is due to fraud or evasion; the Commissioner may amend the assessment at any time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-125 — Further amendment of an amended particular

(1) If: (a) a * franking assessment has been amended (the first amendment ) in any particular; and (b) the Commissioner is of the opinion that it would be just to further amend the assessment in that particular so as to * reduce the assessment; the Commissioner may do so within a period of 3 years after the first amendment. (2) The Commissioner reduces a franking assessment if the Commissioner amends the assessment by doing one or more of the following: (a) increasing the * franking surplus (including from a nil balance); (b) decreasing the * franking deficit (including to a nil balance); (c) decreasing * franking tax payable.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-135 — Amendment on review etc.

Nothing in this Subdivision prevents the amendment of a * franking assessment: (a) to give effect to a decision on a review or appeal; or (b) to * reduce the assessment as a result of an objection made under this Act or pending an appeal or review.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-140 — Notice of amendments

If the Commissioner amends an entity’s * franking assessment, the Commissioner must give the entity notice of the amendment as soon as practicable after making the amendment.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 214-145 — What this Subdivision is about

Franking tax is due and payable at certain times and the general interest charge applies to unpaid amounts. Table of sections Operative provisions 214 ‑ 150 Due date for payment of franking tax 214 ‑ 155 General interest charge 214 ‑ 160 Refunds of amounts overpaid

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-150 — Due date for payment of franking tax

General rule (1) Unless this section provides otherwise, * franking tax assessed for a * corporate tax entity because of events that have occurred, or are taken to have occurred, during an income year is due and payable on the last day of the month immediately following the end of the income year. Part ‑ year assessments (2) * Franking tax payable because of an assessment under section 214 ‑ 70 (a part ‑ year assessment) is due and payable on the day specified in the notice of assessment as the day on which it is due and payable. Amended assessments—other than because of deficit deferral (3) If: (a) the Commissioner amends a * franking assessment (the earlier assessment ) other than because of the operation of section 214 ‑ 105 (an amendment because of a refund of tax that affects * franking deficit tax liability); and (b) the amount of * franking tax of a particular type payable under the amended assessment exceeds the amount of franking tax of that type payable under the earlier assessment; the excess amount is due and payable one month after the day on which the assessment was amended. Tax payable because of deficit deferral (4) If: (a) a * corporate tax entity * receives a refund of income tax or * receives a refund of diverted profits tax; and (b) the receipt of the refund gives rise to a liability, or an increased liability, to pay * franking deficit tax because of the operation of subsection 205 ‑ 50(2) or (3); the franking deficit tax or, if there is an increase in an existing liability to pay franking deficit tax, the difference between the original liability and the increased liability, is due and payable on: (c) if the entity accounts for the liability, or increased liability, in a * franking return that is * outstanding for the income year in which the liability arose—the day on which the outstanding return is required to be given to the Commissioner; or (d) in any other case—14 days after the day on which the refund was received.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 27 of 2017, effective Sch 1 (items 14–43, 52) and Sch 3: 1 July 2017 (s 2(1) items 4, 5)

s 214-155 — General interest charge

If: (a) * franking tax of a particular type payable by a * corporate tax entity remains unpaid after the time by which it is due and payable; and (b) the Commissioner has not allocated the unpaid amount to an * RBA; the entity is liable to pay the * general interest charge on the unpaid amount for each day in the period that: (c) starts at the beginning of the day on which the franking tax was due to be paid; and (d) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the franking tax; (ii) general interest charge on any of the franking tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 214-160 — Refunds of amounts overpaid

Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if references in that section to tax included references to * franking tax.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 214-170 — What this Subdivision is about

Generally applicable provisions to do with record keeping apply for the purposes of the imputation system. Table of sections Operative provisions 214 ‑ 175 Record keeping

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 2 of 2015, effective Sch 2 (items 1, 73, 111) and Sch 4 (items 1–8, 79): 25 Feb 2015 (s 2(1) items 3, 5, 6) Sch 2 (items 29–33): 1 July 2015 (s 2(1) item 4)

s 214-175 — Record keeping

(1) Section 262A of the Income Tax Assessment Act 1936 applies for the purposes of this Part as if: (a) the reference in that section to a person carrying on a business were a reference to a * corporate tax entity; and (b) the reference in paragraph (2)(a) of that section to the person’s income and expenditure were a reference to: (i) the entity’s * franking account balance; and (ii) the entity’s liability to pay * franking tax; and (c) paragraph (5)(a) of that section were omitted. (2) A * PDF does not need to maintain records under section 262A of the Income Tax Assessment Act 1936 in relation to a * venture capital sub ‑ account if the * PDF does not elect to be a * participating PDF.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 215-1 — Application of the imputation system to non ‑ share equity interests

(1) The * imputation system applies to a * non ‑ share equity interest in the same way as it applies to a * membership interest. (2) The * imputation system applies to an equity holder in an entity who is not a member of the entity in the same way as it applies to a member of the entity.

Amendment history: Inserted by No 48 of 2002, effective 29 June 2002

s 215-5 — What this Subdivision is about

While non ‑ share dividends are, as a general rule, frankable, all or part of some non ‑ share dividends are taken to be unfrankable by virtue of these rules. Table of sections 215 ‑ 10 Certain non ‑ share dividends by ADIs unfrankable 215 ‑ 15 Non ‑ share dividends are unfrankable if profits are unavailable 215 ‑ 20 Working out the available frankable profits 215 ‑ 25 Anticipating available frankable profits

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 215-10 — Certain non ‑ share dividends by ADIs unfrankable

(1) A * non ‑ share dividend paid by an ADI (an authorised deposit ‑ taking institution) for the purposes of the Banking Act 1959 is unfrankable if: (a) the ADI is an Australian resident; and (b) the non ‑ share dividend is paid in respect of a * non ‑ share equity interest that: (i) by itself; or (ii) in combination with one or more * schemes that are * related schemes to the scheme under which the interest arises; forms part of the ADI’s Tier 1 capital either on a solo or consolidated basis (within the meaning of the * prudential standards); and (c) the non ‑ share equity interest is issued at or through a * permanent establishment of the ADI in a * listed country; and (d) the funds from the issue of the non ‑ share equity interest are raised and applied solely for one or more purposes permitted under subsection (2) in relation to the non ‑ share equity interest. (2) The permitted purposes in relation to the * non ‑ share equity interest (the relevant interest ) are the following: (a) the purpose of the business of the ADI carried on at or through the permanent establishment other than the transfer of funds directly or indirectly to: (i) the Australian head office of the permanent establishment; or (ii) any * connected entity of the ADI that is an Australian resident; or (iii) a permanent establishment of the ADI, or of a connected entity of the ADI, located in Australia; (b) the purpose of redeeming: (i) a * debt interest; or (ii) a non ‑ share equity interest; that is issued, before the relevant interest is issued, at or through the permanent establishment and is held by a connected entity of the ADI that is an Australian resident; (c) the purpose of returning funds to: (i) the Australian head office of the permanent establishment; or (ii) a permanent establishment of the ADI or of a connected entity of the ADI, located in Australia; if the funds are contributed, before the relevant interest is issued, for use in the business of the ADI carried on at or through the permanent establishment.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 96 of 2004, effective 29 June 2004 | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011

s 215-15 — Non ‑ share dividends are unfrankable if profits are unavailable

(1) If: (a) a * corporate tax entity pays a * non ‑ share dividend; and (b) immediately before the payment, the amount of the * available frankable profits of the entity is nil, or less than nil; the non ‑ share dividend is unfrankable . (2) If: (a) a * corporate tax entity pays a * non ‑ share dividend that is not one of a number of non ‑ share dividends paid at the same time; and (b) immediately before the payment, the amount of the * available frankable profits of the entity, although greater than nil, are less than the amount of the non ‑ share dividend; the entity is taken to have made a frankable distribution equal to the amount of the available frankable profits. The remainder of the dividend is taken to be an unfrankable distribution. (3) If: (a) a * corporate tax entity pays a * non ‑ share dividend that is one of a number paid at the same time; and (b) immediately before the payment, the amount of the * available frankable profits of the entity, although greater than nil are less than the sum of the amounts of the non ‑ share dividends; the entity is taken to have made a frankable distribution equal to the amount worked out using the formula: The remainder of the dividend is taken to be an unfrankable distribution.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 215-20 — Working out the available frankable profits

(1) Use the following formula to work out the amount of a * corporate tax entity’s available frankable profits at a particular time: where: committed share dividends means the sum of: (a) the amounts of any * distributions that are not * non ‑ share dividends and are paid by the entity at that time; and (b) if the entity has announced that it will pay distributions that are not non ‑ share dividends at a later time, or is committed or has resolved (formally or informally) to paying such distributions at a later time—the amounts of those distributions. maximum frankable amount means the maximum amount of * frankable * distributions (other than * non ‑ share dividends) that the * corporate tax entity could pay at that time having regard to its available profits at that time. undebited non ‑ share dividends means the sum of the amounts of the franked parts of the * non ‑ share dividends (worked out under subsection (2)) that: (a) were not debited to available profits; and (b) were paid within the preceding 2 income years or were paid under the same * scheme under which the entity pays the non ‑ share dividend. (2) The amount of the franked part of a * non ‑ share dividend is worked out using the following formula: where: applicable gross ‑ up rate means the * corporate tax gross ‑ up rate of the entity making the distribution for the income year in which the distribution is made.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 215-25 — Anticipating available frankable profits

(1) A * corporate tax entity that pays a * non ‑ share dividend may anticipate * available frankable profits if: (a) the entity: (i) has announced the payment of; or (ii) is committed or has resolved (formally or informally) to pay; * distributions other than non ‑ share dividends (the committed distributions ) after payment of the non ‑ share dividend; and (b) but for this subsection, section 215 ‑ 15 would apply to the non ‑ share dividend; and (c) the entity’s available frankable profits would be greater than nil at the relevant time if the committed distributions were ignored; and (d) it is reasonable to expect that available profits will arise after payment of the non ‑ share dividend and before payment of the committed distributions; and (e) it is reasonable to expect that, having regard to the available profits mentioned in paragraph (d), the amount of the entity’s * adjusted available frankable profits immediately after each of the committed distributions is paid will be greater than nil. The available frankable profits immediately before the entity pays the non ‑ share dividend is then the smallest of the amounts of the adjusted available frankable profits mentioned in paragraph (e). (2) The entity’s adjusted available frankable profits immediately after a committed distribution is paid is the amount that would be its * available frankable profits at that time if all committed distributions to be paid after that time, and the * non ‑ share dividend, were ignored. (3) A * franking debit arises for the entity if: (a) the entity anticipates * available frankable profits under subsection (1); and (b) the available frankable profits of the entity are less than nil: (i) immediately after the last of the committed distributions is made; or (ii) immediately before the end of the income year following the income year in which the * non ‑ share dividend is paid; whichever is earlier. (4) The * franking debit is equal to the lesser of: (a) the amount by which the * available frankable profits is below nil; and (b) the amount of the franked part of the * non ‑ share dividend (worked out using subsection 215 ‑ 20(2)) or, if more than one non ‑ share dividend is made at the relevant time, the sum of the amounts of the franked parts of those non ‑ share dividends. (5) In working out the entity’s * available frankable profits for the purposes of subsection (3) or (4), disregard: (a) any * distributions that: (i) the entity announces, or becomes committed to or resolves (formally or informally) to pay after the payment of the * non ‑ share dividend; and (ii) have not been paid; and (b) any estimate made by the entity under subsection (1) after the non ‑ share dividend is paid.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8)

s 216-1 — When a distribution made to a member of a corporate tax entity is treated as having been made to someone else

There are 2 situations in which a * franked distribution, or a distribution * franked with an exempting credit, that is made to a * member of a * corporate tax entity is taken to have been made to another entity.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 216-5 — First situation (cum dividend sales)

(1) The first situation is one in which: (a) the * corporate tax entity makes a * franked distribution, or a * distribution franked with an exempting credit, to a * member of the entity in respect of a * membership interest in the entity; and (b) at the * distribution closing time, the member is under an obligation to transfer the membership interest to another person under a contract for the sale of the membership interest; and (c) the contract: (i) requires that the distribution be paid on to the other person; and (ii) is entered into in the ordinary course of trading on an * approved stock exchange in Australia or elsewhere. (2) The * distribution is taken to have been made to the other person as a * member of the entity (and not to the member). Note: As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208. (3) The * distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216 ‑ 10.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 216-10 — Second situation (securities lending arrangements)

(1) The second situation is one in which: (a) the * corporate tax entity makes a * franked distribution, or a * distribution franked with an exempting credit, to a * member of the entity in respect of a * membership interest in the entity; and (b) at the time the distribution was made, the member was under an obligation to pay the distribution to another person under a securities lending arrangement; and (c) the obligation was incurred in the member’s capacity as the borrower under the securities lending arrangement; and (d) the * distribution closing time occurred during the borrowing period. (2) The * distribution is taken to have been made to the other person as a * member of the entity (and not to the member). Note: As the other person is the entity receiving the distribution, there may be tax effects for the other person under Division 207 or 208. (3) The distribution referred to in paragraph (1)(a) includes a distribution that is taken to be made as a result of one or more previous applications of this section or section 216 ‑ 5.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 216-15 — Distribution closing time

If * distributions by a * corporate tax entity are made to those * members who were members as at a particular time at or before the distribution is made, that time is the distribution closing time in relation to those distributions.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 216-20 — Cum dividend sale—statement by securities dealer

If: (a) section 216 ‑ 5 applies in relation to a * franked distribution or a * distribution franked with an exempting credit (cum dividend sales); and (b) a * securities dealer has acted for a particular party to the contract concerned; the securities dealer must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 216-25 — Cum dividend sale—statement by party

If: (a) section 216 ‑ 5 applies in relation to a * franked distribution or a * distribution franked with an exempting credit (cum dividend sales); and (b) a particular party to the contract concerned has not had a * securities dealer acting for him or her; that party must, as soon as practicable after the making of the distribution, give to the other party to the contract a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 216-30 — Securities lending arrangements—statement by borrower

If section 216 ‑ 10 (securities lending arrangements) applies in relation to a * franked distribution, or a * distribution franked with an exempting credit, the borrower must, as soon as practicable after the making of the distribution, give to the lender a statement in the * approved form setting out such information in relation to the distribution as is required by the approved form.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 218-5 — Application of imputation rules to co ‑ operative companies

(1) The * imputation system applies to a * co ‑ operative company in the same way as it applies to any other company but with the modifications set out in this section. (2) Each reference to a * distribution is taken to include a reference to an amount distributed as mentioned in paragraph 120(1)(a) or (b) of the Income Tax Assessment Act 1936 . (3) Despite subsection 202 ‑ 75(1) (about giving distribution statements), a * co ‑ operative company does not have to give the recipient of a * frankable distribution a * distribution statement unless the * franking percentage for the distribution is greater than zero.

Amendment history: Inserted by No 101 of 2003, effective s. 4, Schedule 1 (items 2–20, 22), Schedule 2 (items 1–12), Schedule 3 (items 2–6) and Schedule 6 (items 16, 22–25, 27, 28, 30): Royal Assent s. 5: 11 Oct 2002 Sch 6 (items 17–19): 1 July 1997 (s 2(1) items 17, 18) Sch 6 (items 20, 21): 21 Dec 2000 (s 2(1) items 19, 20) Sch 6 (item 26): 10 Dec 1999 (s 2(1) item 22) Sch 6 (item 29): 30 June 2000 (s 2(1) item 25)

s 219-1 — What this Division is about

This Division sets out how the imputation rules are applied to a life insurance company.

Amendment history: Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16)

s 219-10 — Application of imputation rules to life insurance companies

(1) This Part (except this Division) applies to a * life insurance company in the same way as it applies to any other company. (2) However, that application is subject to the modifications set out in this Division.

Amendment history: Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16)

s 219-15 — Franking credits

(1) The table in section 205 ‑ 15 does not apply to a * life insurance company. (2) The following table sets out when a * franking credit arises under this section in the * franking account of a * life insurance company. Franking credits in the franking account Item If: A credit of: Arises: 1 the company * pays a PAYG instalment; and the company satisfies the * residency requirement for the income year in relation to which the PAYG instalment is paid; and the payment is made before the company’s * assessment day for that income year; and the company is a * franking entity for the whole or part of the relevant * PAYG instalment period that part of the payment that: (a) the company estimates will be attributable to the * shareholders’ share of the * income tax liability of the company for that income year; and (b) is attributable to the period during which the company was a franking entity on the day on which the payment is made (see note 1 to this subsection) 2 the company * paid a PAYG instalment; and the company satisfied the * residency requirement for the income year in relation to which the PAYG instalment was paid; and the payment was made before the company’s * assessment day for that income year; and the company was a * franking entity for the whole or part of the relevant * PAYG instalment period that part of the payment that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity on the company’s assessment day for that income year (see note 1 to this subsection) 3 the company * pays a PAYG instalment; and the company satisfies the * residency requirement for the income year in relation to which the PAYG instalment is paid; and the payment is made on or after the company’s * assessment day for that income year; and the company is a * franking entity for the whole or part of the relevant * PAYG instalment period that part of the payment that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity on the day on which the payment is made 4 the company * pays income tax; and the company satisfies the * residency requirement for the income year for which the tax is paid; and the company is a * franking entity for the whole or part of that income year that part of the payment that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity on the day on which the payment is made 5 a * franked distribution is made to the company; and the company satisfies the * residency requirement for the income year in which the distribution is made; and the company is a * franking entity when it receives the distribution; and the company is entitled to a * tax offset under Division 207 because of the distribution; and the tax offset is not subject to the refundable tax offset rules (see Division 67) the amount of the tax offset on the day on which the distribution is made 6 a * franked distribution * flows indirectly to the company through a partnership or the trustee of a trust; and the company is a * franking entity when the franked distribution is made; and the company is entitled to a * tax offset under Division 207 because of the distribution; and the tax offset is not subject to the refundable tax offset rules (see Division 67) the amount of the tax offset at the time specified in subsection (3) 6A a * franking debit arises under item 2 or 3 of the table in subsection 219 ‑ 30(2) because the company receives a * tax offset refund; and the company’s tax offset refund is subsequently reduced and the company is liable to pay to the Commonwealth the amount of the excess mentioned in subsection 172A(2) of the Income Tax Assessment Act 1936 ; and the company pays the amount of the excess the difference (if any) between: (a) the amount of the franking debit; and (b) the amount the franking debit would have been if the tax offset refund were reduced by the amount of the excess on the day on which the amount of the excess is paid 7 the company incurs a liability to pay * franking deficit tax under section 205 ‑ 45 or 205 ‑ 50 the amount of the liability immediately after the liability is incurred 8 a * franking credit arises under subsection 418 ‑ 55(1) in relation to an * exploration credit the amount of the * franking credit specified in subsection 418 ‑ 55(2) at the time provided by subsection 418 ‑ 55(3) 9 the company * pays diverted profits tax; and the company satisfies the * residency requirement for the income year for which the tax is paid; and the company is a * franking entity for the whole or part of that income year that part of the payment that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity; multiplied by the proportion worked out under subsection (4) on the day on which the payment is made Note 1: On the assessment day, a franking credit that arose under item 1 of the table: • is reversed by a franking debit that arises under item 1 of the table in section 219 ‑ 30; and • is replaced with a franking credit that arises under item 2 of the table in this section. Note 2: Section 219 ‑ 50 tells you how to work out the part of an amount that is attributable to the shareholders’ share of the income tax liability of the company for the income year. Note 3: To find out whether a tax offset under Division 207 is subject to the refundable tax offset rules: see section 67 ‑ 25. (3) A * franking credit covered by item 6 of the table arises at the end of the income year: (a) that is an income year of the last partnership or trust interposed between: (i) the * life insurance company; and (ii) the * corporate tax entity that made the distribution; and (b) during which the * franked distribution * flows indirectly to the life insurance company. (4) The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.

Amendment history: Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 21 of 2015, effective s 4 and Sch 6 (items 1, 2, 16–25, 73): 19 Mar 2015 (s 2(1) items 1, 7–11, 13) Sch 1 (items 1–17, 49), Sch 3 and Sch 7 (items 13–21): 20 Mar 2015 (s 2(1) items 2, 4, 15) Sch 4 (items 1–5, 9–17): 1 July 2015 (s 2(1) item 5) Sch 6 (items 51–59, 74–79): never commences (s 2(1) items 12, 14) | Amended by No 27 of 2017, effective Sch 1 (items 14–43, 52) and Sch 3: 1 July 2017 (s 2(1) items 4, 5) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7) | Amended by No 127 of 2021, effective Sch 1 and Sch 3 (items 42, 49–63, 65–69, 71, 72): 1 Jan 2022 (s 2(1) items 2, 5) Sch 2 (item 56) and Sch 3 (items 3–5, 33–35): 8 Dec 2021 (s 2(1) items 3, 4)

s 219-30 — Franking debits

(1) The table in section 205 ‑ 30 (except items 2 and 2A) applies to a * life insurance company in the same way as it applies to any other company. (2) The following table sets out when a * franking debit arises under this section in the * franking account of a * life insurance company. Franking debits in the franking account Item If: A debit of: Arises: 1 a * franking credit arises for the company under item 1 of the table in section 219 ‑ 15 ( * payment of a PAYG instalment) the amount of the franking credit on the company’s * assessment day for the income year mentioned in that item 2 the company * receives a refund of income tax; and the company satisfies the * residency requirement for the income year to which the refund relates; and the company was a * franking entity for the whole or part of that income year that part of the refund that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity on the day on which the refund is received 3 the company * receives a * tax offset refund; and the company does not satisfy the * residency requirement for the income year to which the refund relates; and the company was a * franking entity for the whole or part of that income year; and the company’s * franking account is in * surplus on the day on which the refund is received the lesser of: (a) that part of the refund that is attributable to: (i) the * shareholders’ share of the * income tax liability of the company for that income year; and (ii) the period during which the company was a franking entity; and (b) the amount of the * franking surplus on the day on which the refund is received 4 the company * receives a refund of diverted profits tax; and the company satisfies the * residency requirement for the income year to which the refund relates; and the company was a * franking entity for the whole or part of that income year that part of the refund that is attributable to: (a) the * shareholders’ share of the * income tax liability of the company for that income year; and (b) the period during which the company was a franking entity; multiplied by the proportion worked out under subsection (3) on the day on which the refund is received Note 1: On the assessment day, a franking debit that arises under item 1 of this table reverses the effect of a franking credit that arose under item 1 of the table in section 219 ‑ 15. Note 2: Section 219 ‑ 50 tells you how to work out the part of an amount that is attributable to the shareholders’ share of the income tax liability of the company for the income year. (3) The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ) divided by 40%.

Amendment history: Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 27 of 2017, effective Sch 1 (items 14–43, 52) and Sch 3: 1 July 2017 (s 2(1) items 4, 5) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 219-40 — Residency requirement

The tables in sections 219 ‑ 15 and 219 ‑ 30 are relevant for the purposes of subsection 205 ‑ 25(1) (about the residency requirement).

Amendment history: Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16)

s 219-45 — Assessment day

A * life insurance company’s assessment day for an income year is the earlier of: (a) the day on which the company furnishes its * income tax return for that income year; or (b) the day on which the Commissioner makes an assessment of the amount of the company’s taxable income for that income year under section 166 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16)

s 219-50 — Amount attributable to shareholders’ share of income tax liability

(1) Subsection (2) applies to a * life insurance company in relation to the payment or refund mentioned in an item of a table in this Subdivision (except item 1 of the table in section 219 ‑ 15). Note: The operation of this section is affected by section 219 ‑ 75 if a tax offset under section 205 ‑ 70 is applied to work out the company’s income tax liability. (2) For the purposes of this Part, the part of the payment or refund that is attributable to the * shareholders’ share of the * income tax liability of the company for an income year must be worked out as follows: Method statement Step 1. Work out the part of the company’s total * income tax liability for the income year that is attributable to the company’s shareholders. The result of this step is the shareholders’ share of the income tax liability of the company for the income year. Step 2. Divide the step 1 result by that total * income tax liability. The result of this step is the shareholders’ ratio for the income year. Step 3. Multiply the amount of the payment or refund by the * shareholders’ ratio. The result of this step is the part of the payment or refund that is attributable to the * shareholders’ share of the * income tax liability of the company for the income year. (3) For the purposes of this Part, the estimate mentioned in item 1 of the table in section 219 ‑ 15 (the part of a payment estimated to be attributable to the * shareholders’ share of a company’s * income tax liability for an income year) must be worked out on the basis of: (a) subject to paragraph (b), the method statement in subsection (2); and (b) the company’s reasonable estimate of the amounts that, on the company’s * assessment day for the income year, will be: (i) its total income tax liability for the income year; and (ii) the part of that total income tax liability that is attributable to its shareholders. (4) In working out the part of the * income tax liability of a * life insurance company that is attributable to the shareholders of the company for the purposes of this section, regard is to be had to the accounting records of the company.

Amendment history: Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 219-55 — Adjustment resulting from an amended assessment

(1) This section applies in relation to the * franking account of a * life insurance company if: (a) the assessment of the company’s * income tax liability for an income year is amended on a particular day (the adjustment day ); and (b) the * shareholders’ ratio (the new ratio ) based on the amended assessment is different from the shareholders’ ratio used previously in relation to that income year to work out a * franking credit or * franking debit for the company; and (c) the franking account would have a different balance on the adjustment day if the new ratio had been used to work out all the franking credits and franking debits covered by paragraph (b). Note: The operation of this section is affected by section 219 ‑ 75 if a tax offset under section 205 ‑ 70 is, or has been, applied to work out the company’s income tax liability. (2) On the adjustment day, a * franking credit or * franking debit (as appropriate) of the amount worked out under subsection (3) arises in the * franking account. (3) The amount is an adjustment that will bring the * franking account to the balance that it would have on the adjustment day if the new ratio had been used to work out all the * franking credits and * franking debits covered by paragraph (1)(b). Example: On the basis of a shareholders’ ratio of 60% for the income year, franking credits of the amounts of $6,000, $6,000, $6,000 and $6,000 arose under item 2 of the table in section 219 ‑ 15 for Company X. An amended assessment results in a new shareholders’ ratio of 70%. Under this section, a franking credit of $4,000 arises on the day of the amended assessment to bring the balance of the franking account from $24,000 to $28,000, which would be the account’s balance if the new shareholders’ ratio had been used.

Amendment history: Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Inserted by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 219-70 — Tax offset under section 205 ‑ 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. (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.

Amendment history: Inserted by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Repealed and substituted by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 219-75 — Working out franking credits and franking debits where a tax offset under section 205 ‑ 70 is applied

Revised shareholders’ ratio—modification of section 219 ‑ 50 (1) Subsection (2) applies to a * life insurance company if a * tax offset under section 205 ‑ 70 is applied to work out the company’s * income tax liability for an income year. Note: This means subsection (2) applies if the tax offset is applied to reduce the part of the company’s basic income tax liability mentioned in subsection 219 ‑ 70(1) in relation to the income year. (2) For the purposes of working out the amount of a * franking credit or * franking debit for the company in relation to the income year (other than a franking credit covered by item 1 of the table in section 219 ‑ 15), section 219 ‑ 50 has effect as if: (a) steps 1 and 2 of the method statement in section 219 ‑ 50 were omitted; and (b) the reference in step 3 of that method statement to the * shareholders’ ratio were a reference to the revised shareholders’ ratio worked out as follows: Method statement Step 1. Work out the remainder (if any) of the part of the company’s basic income tax liability mentioned in subsection 219 ‑ 70(1) after the * tax offset is applied to reduce that part. Note: The part mentioned in that subsection is the part of an amount of the company’s income tax liability for the income year that is attributable to its shareholders. Step 2. Divide the step 1 result by the company’s total * income tax liability for the income year (after applying the * tax offset). The result (which can be nil) is the company’s revised shareholders’ ratio for the income year. Example: For the 2002 ‑ 2003 income year X Co (which is a life insurance company) has a tax offset of $68,000 under section 205 ‑ 70. Its income tax liability for that year would have been $400,000 on the assessment day (1 February 2004) if the tax offset were disregarded. Of that liability, $80,000 is attributable to the shareholders. The step 1 result is therefore $12,000 ($80,000 minus $68,000). X Co’s income tax liability after applying the tax offset is $332,000 ($400,000 minus $68,000). The revised shareholders’ ratio is therefore 3/83 ($12,000 divided by $332,000). For that income year, the company paid $249,000 of PAYG instalments before the assessment day and $83,000 of income tax one month after that day. On the assessment day, a franking credit of $9,000 arises under item 2 of the table in section 219 ‑ 15 ($249,000 multiplied by 3/83). On the day the additional amount of tax is paid, another franking credit of $3,000 arises under item 4 of that table ($83,000 multiplied by 3/83). Adjustment resulting from amended assessment—modification of section 219 ‑ 55 (3) Subsection (4) applies to a * life insurance company if: (a) the assessment of the company’s * income tax liability for an income year (the previous assessment ) is amended; and (b) at least one of the following applies: (i) a * tax offset under section 205 ‑ 70 is applied in making that amended assessment; (ii) a tax offset under section 205 ‑ 70 was applied in making the previous assessment. (4) Section 219 ‑ 55 has effect in relation to the company as if: (a) if subparagraph (3)(b)(i) of this section applies—a reference in that section to the new ratio were a reference to the revised shareholders’ ratio that is based on the amended assessment; and (b) if subparagraph (3)(b)(ii) of this section applies—the reference in paragraph (1)(b) of that section to the * shareholders’ ratio used previously were a reference to the revised shareholders’ ratio that is based on the previous assessment. Example: Continuing the example in subsection (2), the assessment of X Co for the 2002 ‑ 2003 income year is amended on 31 March 2004. Under the amended assessment, X Co’s income tax liability would be $300,000 if the tax offset were disregarded. Of that liability, $60,000 is attributable to the shareholders. That amount is reduced by the tax offset of $68,000 to nil. X Co’s liability to pay income tax is therefore reduced to $240,000 ($300,000 minus $60,000) and it will receive a refund of $92,000 ($332,000 minus $240,000). As the revised shareholders’ ratio has become nil, no franking debit arises from the refund. The franking credits that previously arose from the payments of PAYG instalments and income tax would not have arisen if the new revised shareholders’ ratio had been used. Section 219 ‑ 55 (as applied by subsection (4) of this section) therefore operates to create an adjustment to cancel those franking credits. The adjustment is a franking debit of $12,000 that arises on the day of the amendment of the assessment.

Amendment history: Inserted by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 220-1 — What this Division is about

A company resident in New Zealand may choose that the imputation system apply in relation to it. If it does, the rest of this Part applies in relation to it as if it were an Australian resident company, but with modifications. Some of the modifications also affect: (a) other companies that are members of the same wholly ‑ owned group; or (b) entities that receive distributions from the company resident in New Zealand.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-15 — Objects

(1) The main objects of this Division are: (a) to allow a company that is an * NZ resident to choose that the * imputation system apply in relation to it; and (b) if the company makes that choice, to apply the rest of this Part in relation to the company generally as if it were an Australian resident. (2) Another object of this Division is to prevent the benefits of the * imputation system from being inappropriately made available to or through a * member of a company that is a foreign resident, by modifying the way in which the rest of this Part applies to: (a) a company that has chosen that the system apply in relation to it; and (b) other companies that are members of the same * wholly ‑ owned group as that company; and (c) other entities that receive (directly or indirectly) * distributions from that company.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-20 — What is an NZ resident ?

Company (1) A company is an NZ resident if: (a) the company is incorporated in New Zealand; or (b) the company is not incorporated in New Zealand but carries on business there and either: (i) has its central management and control there; or (ii) has its voting power controlled by * members who are NZ residents. Natural person (2) A natural person is an NZ resident if he or she resides in New Zealand. (3) A natural person is also an NZ resident if his or her domicile is in New Zealand, unless the Commissioner is satisfied that the person’s permanent place of abode is outside New Zealand. (4) A natural person is also an NZ resident if he or she has actually been in New Zealand, continuously or intermittently, during more than half of the income year, unless the Commissioner is satisfied that: (a) the person’s usual place of abode is outside New Zealand; and (b) the person does not intend to take up residence in New Zealand. Not an NZ resident if an Australian resident (5) A person is not an NZ resident if the person is an Australian resident. This has effect despite subsections (1), (2), (3) and (4).

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-25 — Application of provisions of Part 3 ‑ 6 outside this Division

(1) The provisions of Part 3 ‑ 6 outside this Division apply in relation to a company that is an * NZ franking company at a time as if it were an Australian resident at that time. (2) They apply with the modifications made by the other sections of this Division.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-30 — What is an NZ franking company ?

A company is an NZ franking company at a time if, at the time, the company is an * NZ resident and has an * NZ franking choice in force.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-35 — Making an NZ franking choice

A company that is an * NZ resident may, by notice in the * approved form given to the Commissioner, choose that the * imputation system is to apply in relation to the company. The choice is an NZ franking choice .

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-40 — When is an NZ franking choice in force?

(1) A company’s * NZ franking choice comes into force: (a) at the start of the company’s income year in which the notice was given to the Commissioner; or (b) at the start of a later income year specified in the notice. (2) The * NZ franking choice continues in force until it is revoked by the company or cancelled by the Commissioner.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-45 — Revoking an NZ franking choice

(1) A company may revoke its * NZ franking choice by notice in the * approved form given to the Commissioner. (2) To avoid doubt, the revocation takes effect when the notice is given to the Commissioner.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-50 — Cancelling an NZ franking choice

(1) The Commissioner may cancel a company’s * NZ franking choice by written notice given to the company, but only if the Commissioner is satisfied that either: (a) the company was liable to pay * franking deficit tax or * over ‑ franking tax (whether or not because of section 220 ‑ 800 (about joint and several liability for the tax)) and the company did not pay the tax by the day on which it was due and payable; or (b) the company has not complied with subsection 214 ‑ 15(2) or 214 ‑ 20(2) (about giving the Commissioner a * franking return). (2) To avoid doubt, the cancellation takes effect when the notice is given to the company. Review of cancellation (3) If the company is dissatisfied with the cancellation of the choice, it may object against the cancellation in the manner set out in Part IVC of the Taxation Administration Act 1953 . Note: That Part provides for review of the cancellation objected against. Effect of cancelling a choice on making another choice in future (4) If the company makes another * NZ franking choice, it does not come into force unless the Commissioner consents in writing to the choice coming into force. (5) In consenting, the Commissioner may specify when the choice is to come into force. The consent has effect according to its terms, despite section 220 ‑ 40. (6) The Commissioner must give a copy of the consent to the company.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-100 — Residency requirement for franking

(1) An * NZ franking company satisfies the residency requirement when making a * distribution only if the distribution is made at least one month after the notice constituting the company’s * NZ franking choice was given to the Commissioner. Note: This section is relevant to both section 202 ‑ 5 and section 208 ‑ 60, which let a company frank a distribution, or frank a distribution with an exempting credit, only if the company satisfies the residency requirement when making the distribution. (2) Section 202 ‑ 20, as applying because of section 220 ‑ 25, has effect subject to this section. Note: Section 202 ‑ 20 sets out how a company satisfies the residency requirement when making a distribution.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-105 — Unfrankable distributions by NZ franking companies

(1) These * distributions by an * NZ franking company are * unfrankable: (a) a conduit tax relief additional dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand); (b) a supplementary dividend (as defined in that section). (2) This section does not limit section 202 ‑ 45 (about * unfrankable distributions).

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-110 — Maximum franking credit under section 202 ‑ 60

For the purposes of working out the * maximum franking credit for a * frankable distribution made by an * NZ franking company in a * foreign currency, translate the amount of the distribution into Australian currency at the exchange rate applicable at the time of the decision to make the * distribution.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-205 — Franking credit for payment of NZ franking company’s withholding tax liability

(1) A * franking credit arises in the * franking account of a company on the day a payment is made of * withholding tax that the company is liable under section 128B of the Income Tax Assessment Act 1936 to pay, if: (a) because of section 220 ‑ 25, the company satisfies the * residency requirement for the income year in which it * derived the income on which it was liable to pay the withholding tax; and (b) the company is a * franking entity for the whole or part of that income year. The amount of the credit equals the amount of the payment. (2) For the purposes of determining whether the company satisfies the * residency requirement for the income year described in paragraph (1)(a), section 205 ‑ 25 has effect as if the derivation of the income described in that paragraph were an event specified in a relevant table for the purposes of that section.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 220-210 — Effect of franked distribution to NZ franking company or flowing indirectly to NZ franking company

No tax offset for NZ franking company (1) An * NZ franking company to which a * franked distribution is made or * flows indirectly is not entitled under Division 207 to a * tax offset for the * distribution. That Division has effect subject to this section. Denial of tax offset does not stop franking credit or debit arising (2) However, subsection (1) does not prevent a * franking credit or * franking debit from arising in the * NZ franking company’s * franking account under Division 205 or 208. To avoid doubt, the amount of the credit or debit, and the time at which it arises, are the same as they would be apart from subsection (1). Note: This has the effect that the amount and timing of the credit or debit are worked out as if the NZ franking company had been entitled to the tax offset that subsection (1) prevents the company from being entitled to.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-215 — Effect on franking account if NZ franking choice ceases to be in force

(1) This section has effect if: (a) a company has made an * NZ franking choice; and (b) the choice is revoked or cancelled at a time (the end time ); and (c) immediately before the end time the company is a foreign resident. Franking debit if franking surplus just before end time (2) A * franking debit arises in the company’s * franking account on the day during which the end time occurs if the account was in * surplus immediately before that time. The amount of the debit equals the * franking surplus. Franking deficit tax if franking deficit just before end time (3) If the company’s * franking account was in * deficit immediately before the end time, subsection 205 ‑ 45(3) applies in relation to the company as if it ceased to be a * franking entity at the end time. Note: Subsection 205 ‑ 45(3) makes an entity liable to pay franking deficit tax if the entity ceases to be a franking entity and had a franking deficit immediately before ceasing to be a franking entity. (4) Subsection (3) does not limit the effect of subsection 205 ‑ 45(3). Take account of franking debit arising under section 220 ‑ 605 (5) Take account of any * franking debit arising under section 220 ‑ 605 because of the revocation or cancellation in working out for the purposes of this section whether the company’s * franking account is in * surplus or * deficit immediately before the end time. Note: Section 220 ‑ 605 provides for a franking debit to arise in the company’s franking account immediately before the end time if, immediately before the end time, the company was a former exempting entity and its exempting account was in deficit.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 220-300 — NZ franking company’s franking account affected by franking accounts of some of its 100% subsidiaries

(1) This section has effect if all these conditions are met in relation to a company (the franking donor company ) at a time: (a) the franking donor company is at the time: (i) an Australian resident or a * post ‑ choice NZ franking company; and (ii) a * 100% subsidiary of a post ‑ choice NZ franking company (the parent company ) that is not a 100% subsidiary of another company that is a member of the same * wholly ‑ owned group as the parent company; (b) the franking donor company is at the time a 100% subsidiary of a post ‑ choice NZ franking company (the NZ recipient company ) in relation to which these requirements are met: (i) there must be no companies that are * NZ residents and 100% subsidiaries of the NZ recipient company interposed between it and the franking donor company; (ii) the NZ recipient company must be either the parent company or a 100% subsidiary of the parent company; (c) there are interposed between the NZ recipient company and the franking donor company at the time one or more companies, each of which: (i) is a 100% subsidiary of the NZ recipient company; and (ii) is neither an Australian resident nor an NZ resident. What is a post ‑ choice NZ franking company ? (2) A company is a post ‑ choice NZ franking company at a time if: (a) at the time, the company is an * NZ franking company; and (b) the notice constituting the * NZ franking choice that makes the company an NZ franking company at the time was given to the Commissioner at or before the time. Franking donor company’s franking surplus when conditions met (3) If the franking donor company’s * franking account is in * surplus at the first time all the conditions in subsection (1) are met: (a) a * franking debit equal to the surplus arises in the franking donor company’s franking account immediately after that time; and (b) a * franking credit equal to the surplus arises in the NZ recipient company’s franking account immediately after that time. Franking donor company’s franking deficit when conditions met (4) If the franking donor company’s * franking account is in * deficit at the first time all the conditions in subsection (1) are met, subsection 205 ‑ 45(3) applies in relation to the franking donor company as if: (a) it ceased to be a * franking entity at that time; and (b) its franking account had been in deficit to the same extent immediately before that cessation. Note: Subsection 205 ‑ 45(3) makes an entity liable to pay franking deficit tax if the entity ceases to be a franking entity and had a franking deficit immediately before ceasing to be a franking entity. NZ recipient company’s franking account after conditions are met (5) If, apart from paragraph (a), a * franking credit or * franking debit would arise in the franking donor company’s * franking account at a time (the accounting time ) that is a time when all the conditions in subsection (1) are met but after the first time at which all those conditions are met in relation to the franking donor company: (a) the credit or debit does not arise in the franking donor company’s franking account; and (b) a credit or debit of the same amount arises at the accounting time in the NZ recipient company’s franking account instead. (6) However, subsection (5) does not apply in relation to: (a) a * franking debit arising in the franking donor company’s * franking account under subsection (3); or (b) a * franking credit arising in that account because of item 5 of the table in section 205 ‑ 15 in conjunction with subsection (4) of this section; or (c) a franking debit arising in that account under paragraph 220 ‑ 605(3)(a). Note 1: Item 5 of the table in section 205 ‑ 15 gives rise to a franking credit immediately after a liability to franking deficit tax arises. Subsection (4) of this section causes such a liability to arise under section 205 ‑ 45. Note 2: Paragraph 220 ‑ 605(3)(a) gives rise to a franking debit if the NZ franking choice of a company that is a former exempting entity is revoked or cancelled and the company’s exempting account is in deficit immediately before the revocation or cancellation. Franking donor company’s benchmark franking percentage (7) Subsection (5) does not affect the franking donor company’s * benchmark franking percentage. Special rules if franking donor company is former exempting entity (8) If the franking donor company becomes a * former exempting entity at the first time all the conditions in subsection (1) are met: (a) subsections (3) and (4) do not apply; and (b) subsection (5) does not apply in relation to: (i) a * franking credit arising in the franking donor company’s * franking account under item 1 of the table in section 208 ‑ 130 immediately after that time; or (ii) a * franking debit arising in the franking donor company’s franking account under item 1 of the table in section 208 ‑ 145 immediately after that time. Note: Subsection (8) ensures that the franking donor company’s franking account has a nil balance immediately after the company becomes a former exempting entity and that there is an appropriate balance in the company’s exempting account that is not made available for use by the NZ recipient company in franking distributions.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-350 — Providing for a franking credit to arise

(1) This section has effect if: (a) an * NZ franking company makes a * franked distribution to a company (the receiving company ); and (b) the distribution does not * flow indirectly through the receiving company to another entity; and (c) because of section 768 ‑ 5, or section 23AI or 23AK of the Income Tax Assessment Act 1936 : (i) all of the distribution is * exempt income, or is * non ‑ assessable non ‑ exempt income, in the hands of the receiving company; or (ii) part of the distribution is exempt income, or is non ‑ assessable non ‑ exempt income, in the hands of the receiving company. (2) A * franking credit arises in the receiving company’s * franking account on the day on which the distribution is made. Note: If only part of the distribution is exempt income or non ‑ assessable non ‑ exempt income: (a) a franking credit in relation to the distribution will arise under this section in relation to the part of the distribution that is exempt income, or that is non ‑ assessable non ‑ exempt income; and (b) another franking credit in relation to the distribution will arise under item 3 of the table in subsection 205 ‑ 15(1) in relation to the part of the distribution that is not exempt income, or that is not non ‑ assessable non ‑ exempt income (see also subsection 207 ‑ 90(2)). (3) The amount of the * franking credit that so arises is: (a) if subparagraph (1)(c)(i) applies—the amount of the franking credit on the distribution made by the * NZ franking company; or (b) if subparagraph (1)(c)(ii) applies—so much of the franking credit on the distribution made by the NZ franking company as is attributable to the part of the distribution referred to in that subparagraph. (4) The table in subsection 205 ‑ 15(1) has effect subject to this section.

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 220-400 — Gross ‑ up and tax offset for distribution from NZ franking company reduced by supplementary dividend

(1) This section has effect if: (a) an * NZ franking company: (i) makes a * franked distribution to an entity (the recipient ) in an income year; and (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) to the recipient in connection with the franked distribution; and (b) an amount is included in the recipient’s assessable income for the income year under section 207 ‑ 20, and the recipient is entitled to a * tax offset for the income year under that section or section 207 ‑ 110; and (c) the recipient is entitled to a tax offset under Division 770 because of the inclusion of the * distribution in the recipient’s assessable income for the income year. Reduced gross ‑ up (2) The amount included in the recipient’s assessable income under section 207 ‑ 20 is reduced by the amount of the supplementary dividend (but not below zero). Reduced tax offset (3) The amount of the * tax offset under section 207 ‑ 20 is reduced by the amount of the supplementary dividend (but not below zero). What happens if certain provisions apply (4) Subsections (2) and (3) do not apply to the recipient in relation to the * franked distribution if one or more of the following provisions also apply to the recipient in relation to the distribution: (a) subsection 207 ‑ 90(1); (b) subsection 207 ‑ 90(2); (c) subsection 207 ‑ 145(1); (d) subsection 207 ‑ 145(2). (5) If subsection 207 ‑ 90(2) or 207 ‑ 145(2) would also apply to the recipient in relation to the * franked distribution, apply that subsection on the basis that: (a) the amount of the * franking credit on the distribution; had been reduced by: (b) so much of the supplementary dividend as does not exceed that amount of the franking credit. Relationship with sections 207 ‑ 20, 207 ‑ 90 and 207 ‑ 145 (6) Sections 207 ‑ 20, 207 ‑ 90 and 207 ‑ 145 have effect subject to this section.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 220-405 — Franked distribution and supplementary dividend flowing indirectly

(1) This section has effect if: (a) an * NZ franking company: (i) makes a * franked distribution; and (ii) pays a supplementary dividend (as defined in section OB1 of the Income Tax Act 1994 of New Zealand) in connection with the franked distribution; and (b) the franked distribution and the supplementary dividend * flow indirectly to an entity (the recipient ) in an income year because the recipient is a partner in a partnership or a beneficiary or trustee of a trust; and (c) the recipient is entitled under section 207 ‑ 45 to a * tax offset in connection with the * distribution; and (d) the recipient is entitled to a tax offset under Division 770 for the income year because of the distribution. Recipient that is a partner or beneficiary (2) If the * franked distribution * flows indirectly to the recipient under subsection 207 ‑ 50(2) or (3), then: (a) the recipient can deduct an amount for the income year that is equal to so much of its share of the supplementary dividend as does not exceed: (i) if the distribution flows indirectly to the recipient under subsection 207 ‑ 50(2)—the recipient’s individual interest in relation to the distribution that is mentioned in that subsection; or (ii) if the distribution flows indirectly to the recipient under subsection 207 ‑ 50(3)—the recipient’s share amount in relation to the distribution that is mentioned in that subsection; and (b) the recipient’s * tax offset under section 207 ‑ 45 is reduced by so much of the deduction under paragraph (a) as does not exceed its * share of the * franking credit on the distribution. Recipient that is a trustee (3) If the * franked distribution * flows indirectly to the recipient under subsection 207 ‑ 50(4), then: (a) the share amount mentioned in that subsection in relation to the distribution is reduced by so much of the recipient’s share of the supplementary dividend as does not exceed that share amount; and (b) the recipient’s * tax offset under section 207 ‑ 45 is reduced by so much of the reduction under paragraph (a) as does not exceed its * share of the * franking credit on the distribution. What happens if certain provisions apply (4) Subsection (2) or (3) (as appropriate) does not apply to the recipient in relation to the * franked distribution if one or more of the following provisions also apply to the recipient in relation to the distribution: (a) subsection 207 ‑ 95(1); (b) subsection 207 ‑ 95(5); (c) subsection 207 ‑ 150(1); (d) subsection 207 ‑ 150(5). (5) If subsection 207 ‑ 90(5) or 207 ‑ 150(5) would also apply to the recipient in relation to the * franked distribution, apply that subsection on the basis that: (a) the amount of the recipient’s * share of the * franking credit on the distribution; had been reduced by: (b) so much of the recipient’s share of the supplementary dividend as does not exceed the amount of that share of the franking credit. When does a supplementary dividend flow to an entity? (6) A supplementary dividend flows indirectly to an entity if it would have * flowed indirectly to the entity under subsection 207 ‑ 50(2), (3) or (4), if: (a) the dividend had been a * franked distribution; and (b) a reference in that subsection to the entity’s * share of the franked distribution had been a reference to the entity’s share of the supplementary dividend. Share of supplementary dividend (7) The entity’s share of the supplementary dividend is worked out as follows: (8) Nothing in this section has the effect of including in the entity’s assessable income its share of the supplementary dividend. Relationship with Subdivisions 207 ‑ B, 207 ‑ D, 207 ‑ E and 207 ‑ F (9) Subdivisions 207 ‑ B, 207 ‑ D, 207 ‑ E and 207 ‑ F have effect subject to this section.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 220-410 — Franking credit reduced if tax offset reduced

(1) If, under section 220 ‑ 400 or 220 ‑ 405, a * corporate tax entity’s * tax offset (the reduced tax offset ) for the * franked distribution described in that section is less than it would be apart from that section, the * franking credit arising in that entity’s * franking account because of the * distribution is equal to the reduced tax offset. (2) The following provisions have effect subject to this section: (a) items 3 and 4 of the table in section 205 ‑ 15; (b) items 5 and 6 of the table in section 219 ‑ 15. Note: Each of those items gives rise to a franking credit for a franked distribution if the recipient is entitled under Division 207 to a tax offset for the distribution. Those items provide that the amount of the credit equals the amount of that offset.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 220-500 — Publicly listed post ‑ choice NZ franking company and its 100% subsidiaries are not exempting entities

(1) A company is not an * exempting entity at a particular time if: (a) it is a * post ‑ choice NZ franking company at the time; and (b) the company is a * listed public company at the time. (2) A company (the non ‑ exempting company ) is not an * exempting entity at a particular time if at the time: (a) the non ‑ exempting company is a * 100% subsidiary of a company (the listed company ) that is not an exempting entity because of subsection (1); and (b) the non ‑ exempting company is an Australian resident or a * post ‑ choice NZ franking company; and (c) if: (i) there are one or more companies interposed between the non ‑ exempting company and the listed company; and (ii) one or more of the interposed companies are * NZ residents; all of the interposed companies that are NZ residents are post ‑ choice NZ franking companies. (3) This section has effect despite section 208 ‑ 20 (about an entity being an * exempting entity).

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-505 — Post ‑ choice NZ franking company is not automatically prescribed person

(1) A * post ‑ choice NZ franking company is not a prescribed person under section 208 ‑ 40 for the purposes of working out whether another * corporate tax entity is an * exempting entity at a particular time because it is effectively owned by prescribed persons within the meaning of section 208 ‑ 25. (2) However, this section does not prevent the company from being taken under section 208 ‑ 45 to be a prescribed person for those purposes.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-510 — Parent company’s status as prescribed person sets status of all other members of same wholly ‑ owned group

(1) This section has effect for the purposes of working out whether a company is an * exempting entity at a particular time because it is effectively owned by prescribed persons within the meaning of section 208 ‑ 25, if: (a) at the time the company is a * 100% subsidiary of another company (the parent company ) that is not a 100% subsidiary of another member of the same * wholly ‑ owned group; and (b) at the time the parent company is a * post ‑ choice NZ franking company; and (c) there is at least one company (the non ‑ Tasman company ) that meets all these conditions: (i) the non ‑ Tasman company is neither an Australian resident nor an * NZ resident at the time; (ii) the non ‑ Tasman company is a member of the same wholly ‑ owned group at the time; (iii) the non ‑ Tasman company is interposed between the parent company and a company that, at the time, is an Australian resident or a post ‑ choice NZ franking company. (2) At the time, each company that is a * 100% subsidiary of the parent company is a prescribed person if the parent company is a prescribed person at the time for those purposes because of section 208 ‑ 40 or 208 ‑ 45 (taking account of section 220 ‑ 505, if relevant). (3) At the time, each company that is a * 100% subsidiary of the parent company is not a prescribed person if the parent company is not a prescribed person for those purposes because of section 208 ‑ 40 or 208 ‑ 45 (taking account of section 220 ‑ 505, if relevant). (4) This section has effect despite sections 208 ‑ 40, 208 ‑ 45 and 220 ‑ 505 so far as those sections apply in relation to a * 100% subsidiary of the parent company.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-605 — Effect on exempting account if NZ franking choice ceases to be in force

(1) This section has effect if: (a) a company has made an * NZ franking choice; and (b) the choice is revoked or cancelled at a time (the end time ); and (c) immediately before the end time: (i) the company is a foreign resident; and (ii) the company is a * former exempting entity. Exempting debit if exempting surplus just before end time (2) An * exempting debit arises in the company’s * exempting account at the end time if the account was in * surplus immediately before that time. The amount of the debit equals the * exempting surplus. If exempting deficit just before end time (3) If the company’s * exempting account was in * deficit immediately before the end time: (a) a * franking debit equal to that deficit arises in the company’s * franking account immediately before the end time; and (b) an * exempting credit equal to that deficit arises in the company’s exempting account at the end time.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 220-700 — Tax effect of distribution franked by NZ franking company with an exempting credit

(1) This section has effect if an * NZ franking company * franks with an exempting credit a * distribution the company makes when it is a * former exempting entity. (2) If, under Subdivision 208 ‑ H, Division 207 applies in relation to the * distribution, it applies subject to the provisions of this Division that modify the effect of that Division. Note 1: Subdivision 208 ‑ H provides in some cases for the tax effect of a distribution franked with an exempting credit by applying Division 207 as if the distribution were a franked distribution. Note 2: Sections 220 ‑ 400 and 220 ‑ 405 modify the effect of Division 207 so far as it relates to the tax effect of distributions by NZ franking companies that pay supplementary dividends in connection with the distributions. (3) Subdivision 208 ‑ H has effect subject to this section.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 220-800 — Joint and several liability for NZ resident company’s franking tax etc.

(1) This section has effect if: (a) a company (the defaulter ) became liable under another section to pay an amount described in subsection (2) because the company was an * NZ franking company; and (b) the amount was unpaid by the time (the defaulter’s due time ) it was due and payable by the defaulter; and (c) at any time during the period for the amount (see subsection (2)), the defaulter was a member of the same * wholly ‑ owned group as one or more other companies (each of which is a contributor ). (2) For the purposes of subsection (1), the amount and period are shown in the table: Amount and period Item For an amount of this kind: The period is: 1 * Franking deficit tax Whichever of these periods is relevant: (a) if the defaulter was liable to pay the tax because its franking account was in deficit at the end of an income year—that income year; (b) if the defaulter was liable to pay the tax because of another event—the period starting at the start of the income year in which the event occurred and ending when the event occurred 2 * Over ‑ franking tax The income year in which the defaulter made the * frankable distribution that made the defaulter liable to pay the tax 3 * General interest charge on * franking deficit tax or * over ‑ franking tax The period identified under item 1 or 2 for the tax 4 Administrative penalty that: (a) is mentioned in section 284 ‑ 75, 284 ‑ 145, 286 ‑ 75 or 288 ‑ 25 in Schedule 1 to the Taxation Administration Act 1953 ; and (b) relates entirely to * franking deficit tax or * over ‑ franking tax The period identified under item 1 or 2 for the tax (3) Just after the defaulter’s due time, these companies become jointly and severally liable to pay the unpaid amount: (a) the defaulter; (b) each contributor, other than one that, at that time: (i) is neither an Australian resident nor an * NZ resident; or (ii) is prohibited by an * Australian law or a law of New Zealand from entering into an * arrangement that would make the contributor jointly or severally liable for the unpaid amount. (4) The joint and several liability of a particular contributor becomes due and payable by the contributor 14 days after the Commissioner gives it written notice of the liability. Note 1: Two or more contributors will have different due and payable dates for the same liability if the Commissioner gives them notice of their liability on different days. Note 2: This section does not affect the time at which the liability for the unpaid amount arose for, or became due and payable by, the defaulter. (5) If: (a) the unpaid amount (the first interest amount ) is * general interest charge for a day in relation to another unpaid amount (the primary liability ) that consists of * franking deficit tax or * over ‑ franking tax; and (b) on a day the Commissioner gives a particular contributor written notice under subsection (4) of the contributor’s liability for the first interest amount; and (c) general interest charge arises: (i) for a day (the later day ) after the days mentioned in paragraphs (a) and (b); and (ii) in relation to the primary liability; and (d) the general interest charge for the later day has not been paid or otherwise discharged in full by the time it became due and payable; the Commissioner is taken to have given the contributor written notice under subsection (4) of the general interest charge for the later day on that later day. (6) Section 254 of the Income Tax Assessment Act 1936 applies in relation to the contributors’ liability as if it were a liability for tax. Note: Section 254 of the Income Tax Assessment Act 1936 deals with the payment of tax by agents and trustees.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 230-1 — What this Division is about

This Division is about the tax treatment of gains and losses from your financial arrangements. You recognise the gains and losses, as appropriate, over the life of a financial arrangement and ignore distinctions between income and capital unless specific rules apply. If it is sufficiently certain that you will make a gain or loss, you use a compounding accruals method to recognise the gain or loss. Otherwise you use a realisation method. Instead of either, you may be able to choose to use a fair value or hedging method or to rely on your financial reports. You may also be able to choose to recognise foreign exchange gains and losses using a retranslation method.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-5 — Scope of this Division

(1) You have a financial arrangement if you have one or more cash settlable legal or equitable rights and/or obligations to receive or provide a financial benefit. (2) This Division does not apply to all financial arrangements. The main exceptions are if: (a) you are: (i) an individual; or (ii) a superannuation entity or fund, managed investment scheme or an entity substantially similar to a managed investment scheme under foreign law with assets of less than $100 million; or (iii) an ADI, securitisation vehicle or other financial sector entity with an aggregated turnover of less than $20 million; or (iv) another entity with an aggregated turnover of less than $100 million, financial assets of less than $100 million and assets of less than $300 million; and either: (iva) the arrangement is to end not more than 12 months after you start to have it; or (v) the arrangement is not a qualifying security; or (b) the arrangement is a financial arrangement under section 230 ‑ 50 (equity interests etc.) and neither a fair value election, a hedging financial arrangement election nor an election to rely on financial reports applies to the arrangement. Note: Section 230 ‑ 455 provides for the exceptions referred to in paragraph (a).

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-10 — Objects of this Division

The objects of this Division are: (a) to minimise the extent to which the tax treatment of gains and losses from your * financial arrangements distorts, by providing inappropriate impediments and stimulation, your trading, financing and investment decisions and your risk taking and risk management; and (b) to do so by aligning more closely the tax and commercial recognition of gains and losses from your financial arrangements in the following ways: (i) by allocating the gains and losses to income years throughout the life of your financial arrangements on a reasonable basis; (ii) by generally recognising gains and losses on revenue rather than capital account; and (c) to appropriately take account of, and minimise, your compliance costs.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-15 — Gains are assessable and losses deductible

Gains (1) Your assessable income includes a gain you make from a * financial arrangement. Note: This Division does not apply to gains that are subject to exceptions under Subdivision 230 ‑ H. Losses (2) You can deduct a loss you make from a * financial arrangement, but only to the extent that: (a) you make it in gaining or producing your assessable income; or (b) you necessarily make it in carrying on a * business for the purpose of gaining or producing your assessable income. Note: This Division does not apply to losses that are subject to exceptions under Subdivision 230 ‑ H. (3) You can also deduct a loss you make from a * financial arrangement if: (a) you are an * Australian entity; and (b) you make the loss in deriving income from a foreign source; and (c) the income is * non ‑ assessable non ‑ exempt income under section 768 ‑ 5, or section 23AI or 23AK of the Income Tax Assessment Act 1936 ; and (d) the loss is, in whole or in part, a cost that is covered by paragraph 820 ‑ 40(1)(a). You can deduct the loss only to the extent to which it is a cost that is covered by paragraph 820 ‑ 40(1)(a). Note: This Division does not apply to losses that are subject to exceptions under Subdivision 230 ‑ H. (4) If the * financial arrangement is a * debt interest, the loss is not prevented from being deductible for an income year under subsection (2) merely because of either or both of the following: (a) one or more of the * financial benefits that are taken into account in working out the amount of the loss are * contingent on aspects of the economic performance (whether past, current or future) of: (i) you or a part of your activities; or (ii) a * connected entity of yours or a part of the activities of a connected entity of yours; (b) one or more of the financial benefits that are taken into account in working out the amount of the loss secure a permanent or enduring benefit for you or a connected entity of yours. (4A) A * dividend on a * debt interest is a loss you can deduct to the extent to which it would have been a deductible loss under subsection (2) if: (a) the payment of the amount of the dividend were the incurring of a liability to pay the same amount as interest; and (b) that interest were incurred in respect of the finance raised by you and in respect of which the dividend was paid or provided; and (c) the debt interest retained its character as a debt interest for the purposes of subsection (4). (5) Subject to subsection (6), subsection (4) does not apply to the loss to the extent to which the annually compounded internal rate of return on the * debt interest exceeds the * benchmark rate of return for the debt interest increased by 150 basis points. (6) If: (a) regulations made for the purposes of subsection 25 ‑ 85(6) provide that a specified number of basis points is to apply for the purposes of applying subsection 25 ‑ 85(5) in particular circumstances; and (b) those circumstances exist in relation to the * debt interest; subsection (5) applies as if the reference in that subsection to 150 basis points were a reference to the number of basis points specified in the regulations. Division does not affect foreign residence rules (7) Nothing in this Division affects the operation of the provisions of Division 6 that provide for the significance of foreign residence for the assessability of ordinary and statutory income. Note 1: Gains that you make under this Division may be ordinary or statutory income for the purposes of Division 6. Note 2: For the effect of a change of residence during an income year, see sections 230 ‑ 485 and 230 ‑ 490.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7) | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 230-20 — Gain or loss to be taken into account only once under this Act

Application of section (1) This section applies to the following: (a) a gain that is included in your assessable income for an income year under this Division; (b) a loss that is allowable as a deduction to you for an income year under this Division; (c) a gain or a loss that is dealt with in accordance with subsection 230 ‑ 310(4) in relation to an income year. Purpose of this section (2) The purpose of this section is to ensure that your gains and losses, and * financial benefits, to which this section applies are taken into account only once under this Act in working out your taxable income. Gain or loss to be taken into account only once (3) A gain or loss to which this section applies is not to be (to any extent): (a) included in your assessable income; or (b) allowable as a deduction to you; or (c) dealt with in accordance with subsection 230 ‑ 310(4); again under this Division for the same or any other income year. (4) A gain or loss to which this section applies is not to be (to any extent): (a) included in your assessable income; or (b) allowable as a deduction to you; under any provisions of this Act outside this Division for the same or any other income year. Section does not give rise to exempt income (5) A gain is not to be treated as * exempt income merely because it is not included in your assessable income under this section.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-25 — Associated financial benefits to be taken into account only once under this Act

Application of section (1) This section applies to a * financial benefit whose amount or value is taken into account in working out whether you make, or the amount of, a gain or loss to which paragraph 230 ‑ 20(1)(a), (b) or (c) applies. Associated financial benefit to be taken into account only once (2) A * financial benefit to which this section applies is not to be (to any extent): (a) included in your assessable income; or (b) allowable as a deduction to you; under any provision of this Act outside this Division for the same or any other income year. Exception for certain bad debts (3) If: (a) a * financial benefit has been included in your assessable income under a provision of this Act outside this Division; and (b) a bad debt deduction would have been allowed under section 25 ‑ 35 in relation to the financial benefit; subsection (2) does not prevent that bad debt deduction from being allowed under section 25 ‑ 35 in relation to the financial benefit as if the debt were still outstanding. Section does not give rise to exempt income (4) A * financial benefit is not to be treated as * exempt income merely because it is not included in your assessable income under this section.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-30 — Treatment of gains and losses related to exempt income and non ‑ assessable non ‑ exempt income

(1) Despite section 230 ‑ 15, a gain that you make from a * financial arrangement: (a) to the extent that it reflects an amount that would be treated, or would reasonably expected to be treated, as * exempt income under a provision of this Act if this Division were disregarded—is exempt income; and (b) to the extent that it reflects an amount that would be treated or would reasonably expected to be treated, as * non ‑ assessable non ‑ exempt income under a provision of this Act if this Division were disregarded—is not assessable income and is not exempt income. (2) Despite section 230 ‑ 15, a gain that you make from a * financial arrangement: (a) to the extent that, if it had been a loss, you would have made it in gaining or producing * exempt income—is exempt income; and (b) to the extent to which, if it had been a loss, you would have made it in gaining or producing * non ‑ assessable non ‑ exempt income—is not assessable income and is not exempt income. (3) A loss you make from a * financial arrangement is not allowable as a deduction to you under any provision of this Act (other than subsection 230 ‑ 15(3)) to the extent that you make it in gaining or producing your: (a) * exempt income; or (b) * non ‑ assessable non ‑ exempt income.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-35 — Treatment of gains and losses of private or domestic nature

Borrowings etc. used for private or domestic purpose (1) Subsections (2) and (3) apply if: (a) a * borrowing is made by you, or credit is provided to you, under a * financial arrangement; and (b) you use some or all of the funds borrowed or the credit provided for a private or domestic purpose. (2) This Division does not apply to a gain you make from the arrangement to the extent that you use the funds raised or the credit provided for a private or domestic purpose. (3) A loss you make from the arrangement is not allowable as a deduction to you under any provision of this Act to the extent that you use the funds raised or the credit provided for a private or domestic purpose. Derivative financial arrangement held for private or domestic purpose (4) Subsections (5) and (6) apply if: (a) you are an individual; and (b) you make a gain or loss from a * derivative financial arrangement; and (c) the arrangement is held, wholly or in part, for a private or domestic purpose. (5) This Division does not apply to a gain you make from the arrangement to the extent that the arrangement is held or used for a private or domestic purpose. (6) A loss you make from the arrangement is not allowable as a deduction to you under any provision of this Act to the extent that the arrangement is held or used for a private or domestic purpose.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-40 — Methods for taking gain or loss into account

Methods available (1) The methods that can be applied to take account of a gain or loss you make from a * financial arrangement are: (a) the accruals and realisation methods provided for in Subdivision 230 ‑ B; or (b) the fair value method provided for in Subdivision 230 ‑ C; or (c) the foreign exchange retranslation method provided for in Subdivision 230 ‑ D; or (d) the hedging financial arrangement method provided for in Subdivision 230 ‑ E; or (e) the method of relying on your financial reports provided for in Subdivision 230 ‑ F; or (f) a balancing adjustment provided for in Subdivision 230 ‑ G. Note: The methods referred to in paragraphs (b) to (e) only apply if you make an election under the relevant Subdivision and you must meet certain requirements before you can make such an election. (2) A gain or loss is not taken into account under any of the methods referred to in paragraphs (1)(a), (b), (c) and (e) to the extent to which it is taken into account under the method referred to in paragraph (1)(f) (balancing adjustment). (3) A gain or loss is not taken into account under the method referred to in paragraph (1)(f) (balancing adjustment) to the extent to which it is taken into account under the method referred to in paragraph (1)(d) (hedging financial arrangement method). Note: The hedging financial arrangement method may take some account of the gain or loss by reference to the balancing adjustment method (see subsection 230 ‑ 300(5)). Elections override accruals and realisation methods (4) Subdivision 230 ‑ B (accruals and realisation method) does not apply to a gain or loss you make from a * financial arrangement: (a) to the extent that Subdivision 230 ‑ C (fair value method) applies to the gain or loss; or Note: See subsection (5) of this section and subsection 230 ‑ 230(4). (b) to the extent that Subdivision 230 ‑ D (foreign exchange retranslation method) applies to the gain or loss; or (c) to the extent that Subdivision 230 ‑ E (hedging financial arrangements method) applies to the arrangement; or (d) if Subdivision 230 ‑ F (method of relying on financial reports) applies to the arrangement; or (e) if the arrangement is a financial arrangement under section 230 ‑ 50 (equity interests etc.). Priorities among election methods (5) Subdivision 230 ‑ C (fair value method) does not apply to a gain or loss you make from a * financial arrangement: (a) to the extent that Subdivision 230 ‑ E (hedging financial arrangements method) applies to the arrangement; or (b) if Subdivision 230 ‑ F (method of relying on financial reports) applies to the arrangement. (6) Subdivision 230 ‑ D (foreign exchange retranslation method) does not apply to a gain or loss you make from a * financial arrangement: (a) if Subdivision 230 ‑ C (fair value method) applies to the arrangement; or (b) to the extent that Subdivision 230 ‑ E (hedging financial arrangements method) applies to the arrangement; or (c) if Subdivision 230 ‑ F (method of relying on financial reports) applies to the arrangement. (7) Subdivision 230 ‑ F (method of relying on financial reports) does not apply to a gain or loss you make from a * financial arrangement to the extent that Subdivision 230 ‑ E (hedging financial arrangements method) applies to the arrangement.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-45 — Financial arrangement

(1) You have a financial arrangement if you have, under an * arrangement: (a) a * cash settlable legal or equitable right to receive a * financial benefit; or (b) a cash settlable legal or equitable obligation to provide a financial benefit; or (c) a combination of one or more such rights and/or one or more such obligations; unless: (d) you also have under the arrangement one or more legal or equitable rights to receive something and/or one or more legal or equitable obligations to provide something; and (e) for one or more of the rights and/or obligations covered by paragraph (d): (i) the thing that you have the right to receive, or the obligation to provide, is not a financial benefit; or (ii) the right or obligation is not cash settlable; and (f) the one or more rights and/or obligations covered by paragraph (e) are not insignificant in comparison with the right, obligation or combination covered by paragraph (a), (b) or (c). The right, obligation or combination covered by paragraph (a), (b) or (c) constitutes the financial arrangement. Note 1: Whether your rights and/or obligations under an arrangement constitute a financial arrangement can change over time depending on changes either to the terms of the arrangement or external circumstances (such as particular rights or obligations under the arrangement being satisfied by the parties). For example, a contract may provide for the transfer of a boat in 6 months time and payment of the contract price at the end of 2 years. Until the boat is delivered, there is no financial arrangement because of the operation of paragraphs (d), (e) and (f) above. Once the boat is delivered, there is a financial arrangement because those paragraphs are no longer applicable. Note 2: The operative provisions of this Division do not apply to all financial arrangements, and only apply partially to some: see the exceptions in Subdivision 230 ‑ H. Note 3: There are some rules in this Division that tell you what happens if an arrangement ceases to be a financial arrangement (see Subdivision 230 ‑ G and section 230 ‑ 505). (2) A right you have to receive, or an obligation you have to provide, a * financial benefit is cash settlable if, and only if: (a) the benefit is money or a * money equivalent; or (b) in the case of a right—you intend to satisfy or settle it by receiving money or a money equivalent or by starting to have, or ceasing to have, another * financial arrangement; or (c) in the case of an obligation—you intend to satisfy or settle it by providing money or a money equivalent or by starting to have, or ceasing to have, another financial arrangement; or (d) you have a practice of satisfying or settling similar rights or obligations as mentioned in paragraph (b) or (c) (whether or not you intend to satisfy or settle the right or obligation in that way); or (e) you deal with the right or obligation, or with similar rights or obligations, in order to generate a profit from short ‑ term fluctuations in price, from a dealer’s margin, or from both; or (f) none of paragraphs (a) to (e) applies but you satisfy subsection (3); or (g) you are able to settle the right or obligation as mentioned in paragraph (b) or (c) (whether or not you intend to satisfy or settle the right or obligation in that way) and you do not have, as your sole or dominant purpose for entering into the arrangement under which you are to receive or provide the financial benefit, the purpose of receiving or delivering the financial benefit as part of your expected purchase, sale or usage requirements. A reference in paragraph (b) or (c) to a financial arrangement does not include a reference to something that is a financial arrangement under section 230 ‑ 50. Note: Examples of dealing of the kind covered by paragraph (e) are: (a) dealing with the right or obligation, or similar rights or obligations, on a frequent basis, a short ‑ term basis or on a frequent and short ‑ term basis; and (b) acquiring the right or obligation, or similar rights or obligations, and managing the resulting risk by entering into offsetting arrangements that provide a profit margin. (3) You satisfy this subsection if: (a) the * financial benefit is readily convertible into money or a * money equivalent; and (b) there is a market for the financial benefit that has a high degree of liquidity; and (c) subsection (4) or (5) is satisfied. (4) This subsection is satisfied if, for the recipient of the * financial benefit, the amount of the money or * money equivalent referred to in paragraph (3)(a) is not subject to a substantial risk of substantial decrease in value. (5) This subsection is satisfied if your purpose, or one of your purposes, for entering into the arrangement under which you are to receive or provide the * financial benefit, is to receive or deliver the financial benefit: (a) to raise or provide finance; or (b) if paragraph (a) does not apply—so that it may be converted or liquidated into money or a money equivalent (other than as part of your expected purchase, sale or usage requirements).

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 230-50 — Financial arrangement (equity interest or right or obligation in relation to equity interest)

(1) You also have a financial arrangement if you have an * equity interest. The equity interest constitutes the financial arrangement. (2) You also have a financial arrangement if: (a) you have, under an * arrangement: (i) a legal or equitable right to receive something that is a financial arrangement under this section; or (ii) a legal or equitable obligation to provide something that is a financial arrangement under this section; or (iii) a combination of one or more such rights and/or obligations; and (b) the right, obligation or combination does not constitute, or form part of, a financial arrangement under subsection 230 ‑ 45(1). The right, obligation or combination referred to in paragraph (a) constitutes the financial arrangement. Note 1: Paragraph 230 ‑ 40(4)(e) prevents the accruals method or the realisation method being applied to something that is a financial arrangement under this section. Note 2: Subsection 230 ‑ 270(1) prevents the retranslation method being applied to something that is a financial arrangement under this section. Note 3: Subsection 230 ‑ 330(1) prevents the hedging method being applied to something that is a financial arrangement under this section.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-55 — Rights, obligations and arrangements (grouping and disaggregation rules)

Single right or obligation or multiple rights or obligations? (1) If you have a right to receive 2 or more * financial benefits, you are taken, for the purposes of this Division, to have a separate right to receive each of those financial benefits. (2) If you have an obligation to provide 2 or more * financial benefits, you are taken, for the purposes of this Division, to have a separate obligation to provide each of those financial benefits. (3) Subsections (1) and (2) apply for the avoidance of doubt. Matters relevant to determining what rights and/or obligations constitute particular arrangements (4) For the purposes of this Division, whether a number of rights and/or obligations are themselves an * arrangement or are 2 or more separate arrangements is a question of fact and degree that you determine having regard to the following: (a) the nature of the rights and/or obligations; (b) their terms and conditions (including those relating to any payment or other consideration for them); (c) the circumstances surrounding their creation and their proposed exercise or performance (including what can reasonably be seen as the purposes of one or more of the entities involved); (d) whether they can be dealt with separately or must be dealt with together; (e) normal commercial understandings and practices in relation to them (including whether they are regarded commercially as separate things or as a group or series that forms a whole); (f) the objects of this Division. In applying this subsection, have regard to the matters referred to in paragraphs (a) to (f) both in relation to the rights and/or obligations separately and in relation to the rights and/or obligations in combination with each other. Example 1: Your rights and obligations under a typical convertible note, including the right to convert the note into a share or shares, would constitute one arrangement. Example 2: Your rights and obligations under a typical price ‑ linked or index ‑ linked bond would constitute one arrangement. Note 1: If you raised funds by means of a contract that you would not have entered into without entering into another contract, and neither contract could be assigned to a third party without the other also being assigned, this would tend to indicate that your rights and obligations under the 2 contracts together constitute one arrangement. Note 2: If the commercial effect of your individual rights and/or obligations in a group or series cannot be understood without reference to the group or series as a whole, this would tend to indicate that all of your rights and/or obligations in the group or series together constitute one arrangement.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-60 — When financial benefit provided or received under financial arrangement

Financial benefit provided under financial arrangement (1) You are taken, for the purposes of this Division, to have (or to have had) an obligation to provide a * financial benefit under a * financial arrangement if: (a) you have (or had) an obligation to provide the financial benefit in relation to the arrangement; and (b) the financial benefit would not otherwise be treated as one that you have (or had) an obligation to provide under the arrangement; and (c) the financial benefit plays an integral role in determining: (i) whether you make a gain or loss from the arrangement; or (ii) the amount of such a gain or loss. Paragraph (a) applies even if the entity to which you provide the financial benefit is not a party to the arrangement. Note: This means that the financial benefits you provide to acquire the financial arrangement (whether to the issuer, a previous holder or a third party) are taken to be financial benefits you provide under the arrangement. The financial benefits you provide may include, for example, fees paid or the forgoing of rights to receive a financial benefit. Financial benefit received under financial arrangement (2) You are taken, for the purposes of this Division, to have (or to have had) a right to receive a * financial benefit under a * financial arrangement if: (a) you have (or had) a right to receive the financial benefit in relation to the arrangement; and (b) the financial benefit would not otherwise be treated as one that you have (or had) a right to receive under the arrangement; and (c) the financial benefit plays an integral role in determining: (i) whether you make a gain or loss from the arrangement; or (ii) the amount of such a gain or loss. Paragraph (a) applies even if the entity that provides the financial benefit is not a party to the arrangement. Note: The financial benefits you receive may include, for example, the waiving of an obligation you have to provide a financial benefit.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-65 — Amount of financial benefit relating to more than one financial arrangement etc.

(1) This section applies if: (a) a * financial benefit plays the integral role mentioned in paragraph 230 ‑ 60(1)(c) or (2)(c) in relation to a * financial arrangement; and (b) either or both of the following apply: (i) the financial benefit plays that role in relation to one or more other financial arrangements; (ii) the financial benefit is provided or received for one or more other things that are not financial arrangements. (2) For the purposes of this Division, determine the amount of the * financial benefit that plays that role in relation to a particular * financial arrangement by apportioning the actual amount of the financial benefit, on a reasonable basis, between: (a) that financial arrangement; and (b) each other financial arrangement (if any) in relation to which the benefit plays that role; and (c) each other thing (if any) mentioned in subparagraph (1)(b)(ii).

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-70 — Apportionment when financial benefit received or right ceases

(1) Apply subsection (2) in working out whether you make, or will make, a gain or loss (and the amount of the gain or loss) at a time when: (a) you receive a particular * financial benefit under a * financial arrangement; or (b) one of your rights under a financial arrangement ceases. The gain or loss is to be calculated in nominal (and not * present value) terms. (2) You must have regard to the extent to which the * financial benefits that you have provided, or are to provide or might provide, under the * financial arrangement are reasonably attributable, at the time mentioned in subsection (1), to the benefit or right referred to in paragraph (1)(a) or (b). (3) Any attribution made under subsection (2) must reflect appropriate and commercially accepted valuation principles that properly take into account: (a) the nature of the rights and obligations under the * financial arrangement; and (b) the risks associated with each * financial benefit, right and obligation under the arrangement; and (c) the time value of money. Note: Generally, no financial benefit you have provided, or are to provide or might provide, under a financial arrangement is reasonably attributable to an amount you receive that is in the nature of interest.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-75 — Apportionment when financial benefit provided or obligation ceases

(1) Apply subsection (2) in working out whether you make, or will make, a gain or loss (and the amount of the gain or loss) at a time when: (a) you provide a particular * financial benefit under the * financial arrangement; or (b) one of your obligations under a financial arrangement ceases. The gain or loss is to be calculated in nominal (and not * present value) terms. (2) You must have regard to the extent to which the * financial benefits that you have received, or are to receive or might receive, under the * financial arrangement are reasonably attributable, at the time mentioned in subsection (1), to the benefit or obligation referred to in paragraph (1)(a) or (b). (3) Any attribution made under subsection (2) must reflect appropriate and commercially accepted valuation principles that properly take into account: (a) the nature of the rights and obligations under the * financial arrangement; and (b) the risks associated with each * financial benefit, right and obligation under the arrangement; and (c) the time value of money. Note: Generally, no financial benefit you have received, or are to receive or might receive, under a financial arrangement is reasonably attributable to an amount you provide that is in the nature of interest.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-80 — Consistency in working out gains or losses (integrity measure)

Object of section (1) The object of this section is to stop you obtaining an inappropriate tax benefit from not working out your gains and losses in a consistent manner. Consistent treatment for particular financial arrangement (2) If: (a) this Division provides that a particular method applies to gains or losses you have from a * financial arrangement; and (b) that method allows you to choose the particular manner in which you apply that method; you must use that manner consistently for the arrangement for all income years. Consistent treatment for financial arrangements of essentially the same nature (3) If: (a) this Division provides that a particular method applies to gains or losses you have from 2 or more * financial arrangements; and (b) that method allows you to choose the particular manner in which you apply that method; you must use that same manner consistently for all of those financial arrangements that are essentially of the same nature. (4) Subsection (3) does not require you to use that same manner consistently for: (a) a * financial arrangement that you start to have on or after the time a * Commonwealth law that amends the method is made; and (b) a financial arrangement that you start to have before that time; if: (c) the Commonwealth law allows you to choose to apply the method in a particular manner (being a manner in which you are not, apart from the Commonwealth law, allowed to apply the method); and (d) the inconsistency is entirely due to you choosing to apply the method in that manner to the financial arrangement mentioned in paragraph (a).

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-85 — Rights and obligations include contingent rights and obligations

To avoid doubt: (a) a right is treated as a right for the purposes of this Division even if it is subject to a contingency; and (b) an obligation is treated as an obligation for the purposes of this Division even if it is subject to a contingency.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11)

s 230-90 — What this Subdivision is about

This Subdivision applies the accruals method to determine the amount and timing of gains and losses from a financial arrangement if they are sufficiently certain for such accrual to be done. This Subdivision applies the realisation method to determine the amount and timing of gains and losses if they are not sufficiently certain to be dealt with under the accruals method. If the accruals method is applied to a gain or loss on the basis of an estimate of a financial benefit and the benefit when received or provided is more or less than the estimate, a balancing adjustment is made to correct for the underestimate or overestimate. If the accruals method is being applied to gains and losses from the arrangement and there is a material change to the arrangement, or the circumstances in which it operates, a reassessment is made of whether the accruals method or the realisation method should apply to gains and losses from the arrangement. A change in circumstances may also cause a re ‑ estimation of gains and losses that the accruals method is being applied to.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 230-95 — Objects of this Subdivision

The objects of this Subdivision are: (a) to properly recognise gains and losses from * financial arrangements by allocating them to appropriate periods of time; and (b) to reduce compliance costs by reflecting commercial accounting concepts where appropriate; and (c) to minimise tax deferral.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)