Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_5:p1
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 5 (pt 1/2)
Character Range: 55598–58286

5                                the entity 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

205‑20  Paying a PAYG instalment or income tax

 (1) An entity pays a PAYG instalment if and only if:
 (a) the entity has a liability to pay the instalment; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.

Note: The requirement in paragraph (a) means that the entity cannot generate franking credits by making a "voluntary" payment of income tax (that is, paying an amount on account of income tax for which the entity is not liable at the time when the payment is made).

 (2) If an entity:
 (a) is liable to pay a *PAYG instalment; and
 (b) has a *PAYG instalment variation credit;
the PAYG instalment variation credit must be fully applied to reduce the liability for the PAYG instalment before any other credit or payment can be applied to reduce that liability.

 (3) An entity pays income tax if and only if:
 (a) the entity has a liability to pay the income tax; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.

Note: The requirement in paragraph (a) means that the entity cannot generate franking credits by making a "voluntary" payment of income tax (that is, paying an amount on account of income tax for which the entity is not liable at the time when the payment is made).

 (4) Subparagraphs (1)(b)(ii) and (3)(b)(ii) do not apply to the application of a credit allowable under or by virtue of:
 (a) Division 18, 18A or 18B of Part III of the Income Tax Assessment Act 1936 (these Divisions deal with credits in respect of foreign tax, credits in respect of overseas tax paid on certain film income and credits in respect of overseas tax paid on certain shipping income); or
 (b) the International Tax Agreements Act 1953 (credit to relieve double taxation); or
 (c) section 45‑30 or 45‑215 in Schedule 1 to the Taxation Administration Act 1953 (these sections deal with credits for *PAYG instalments payable and credit on using a varied rate in certain cases).

 (5) The amount of the *PAYG instalment or income tax paid is equal to:
 (a) the amount of the liability, if it is satisfied in full; or
 (b) the amount by which the liability is reduced, if it is not satisfied in full.

 (6) If: