Document ID: chunk:federal_register_of_legislation:C2004A00901:clause:3_160aqkad:p1
Version: federal_register_of_legislation:C2004A00901
Segment Type: clause
Provision Reference: sch 3 cl 160AQKAD (pt 1/4)
Character Range: 26845–29521

160AQKAD  Consequences of offset entitlement—franking credits and debits

Object of section

 (1) The object of this section is to ensure that, if the Commissioner determines that a life assurance company is entitled to an offset under section 160AQKAA, franking credits and debits that arise in relation to the company's company tax for the eligible year of income do not exceed those that would have arisen if the company had not received the offset under section 160AQKAC and instead satisfied its unreduced liability to pay company tax.

Overview of section

 (2) That object is achieved by reversing any previous franking credits and debits and recalculating them each time a determination is made by the Commissioner as a result of an original or amended company tax assessment. If the company pays a PAYG instalment or company tax, or receives a refund of company tax, after the original or amended company tax assessment that resulted in the determination is served on the company, a separate franking credit or debit will be generated (which may be subject to reversal as a result of a later assessment and determination).

No franking credits or franking debits except under this section

 (3) No franking credit or franking debit arises in relation to the company's company tax for the eligible year of income on or after the day on which the original company tax assessment for that year is served on the company, except under this section.

Reversing out franking credits and debits that arose before the original company tax assessment

 (4) If the determination is made under subsection 160AQKAA(1) (a determination made as a result of the original company tax assessment for the eligible year of income):
 (a) a class C franking debit arises on the day on which the original company tax assessment is served on the company equal to the sum of all class C franking credits that have arisen in relation to the company's company tax for the eligible year of income before that day; and
 (b) a class C franking credit arises on the day on which the original company tax assessment is served on the company equal to the sum of all class C franking debits that have arisen in relation to the company's company tax for the eligible year of income before that day.

Franking credit on original company tax assessment

 (5) On the day on which the original company tax assessment is served on the company, a class C franking credit equal to the adjusted amount of the amount worked out using the following formula arises:
where:

amount of the company's liability to pay company tax for the eligible year of income that would normally give rise to franking credits