Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p10
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 10/19)
Character Range: 3776642–3779318

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.

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.

Franking accounts of NZ franking company and some of its 100% subsidiaries

220‑300  NZ franking company's franking account affected by franking accounts of some of its