Document ID: chunk:federal_register_of_legislation:C2025C00029:section:11:p23
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 11 (pt 23/64)
Character Range: 3351935–3354607

choice in the *approved form given to the Commissioner to untaint the account.
 (2) The choice can be made at any time, but cannot be revoked.
Note: The choice has no effect in relation to a subsequent tainting of the share capital account that occurs after the choice is made.

197‑60  Choosing to untaint—liability to untainting tax

Definitions
 (1) For the purpose of this section:
 (a) a company whose *share capital account is *tainted is a company with only lower tax members in relation to the tainting period if, throughout the tainting period, all *members of the company were covered by one, or a combination of 2 or more, of the following subparagraphs:
 (i) other companies;
 (ii) *complying superannuation entities;
 (iii) foreign residents; and
 (b) a company whose share capital account is tainted is a company with higher tax members in relation to the tainting period if it is not a company with only lower tax members in relation to the tainting period.
For this purpose, the tainting period is the period beginning when the share capital account most recently became tainted and ending when the company chooses to untaint the account.

Liability to untainting tax
 (2) A company that chooses to untaint its *share capital account is liable to pay tax, known as untainting tax, equal to the amount calculated in accordance with the formula:
where:
applicable tax amount has the meaning given by subsection (3).
section 197‑45 franking debits means the total *franking debits arising under section 197‑45 because of the transfer of the amounts that made up the *tainting amount at the time of the choice.
section 197‑65 franking debits means the total (if any) *franking debits arising under section 197‑65 because of the choice to untaint.
Note: The payment of untainting tax does not give rise to a franking credit.
 (3) In subsection (2), the applicable tax amount is the amount calculated in accordance with the formula:
where:
applicable tax rate means:
 (a) for a company with only lower tax members in relation to the tainting period—the company's *corporate tax rate for imputation purposes for the income year in which the choice is made; or
 (b) for a company with higher tax members in relation to the tainting period—the sum of:
 (i) the maximum rate specified in column 2 of the table in Part I of Schedule 7 to the Income Tax Rates Act 1986 that applies for the income year in which the choice is made; and
 (ii) 3%.
Note: The 3% referred to in subparagraph (b)(ii) relates to rates of Medicare levy and surcharge.
notional franking amount has the meaning given by subsection (4).
 (4) In subsection (3), the notional franking amount is the